GLM TEAM 
As we commemorate World Consumer Rights Day on 15 March and Human Rights Day on 21 March, it’s opportune to reflect on the rights that protect consumers in the microfinance industry. The National Credit Act (NCA) of 2005 is a cornerstone of consumer protection in South Africa, ensuring fair treatment, transparency and responsible lending practices.
Niresh Gopichand, Risk Director at Atlas Finance, says many consumers feel powerless when applying for credit, but the NCA empowers them with specific rights to ensure fair and ethical treatment. “Understanding these rights is crucial to making informed financial decisions and avoiding unscrupulous practices.”
Leonie van Pletzen, CEO of MicroFinance South Africa (MFSA) adds; “The microfinance industry plays a vital role in providing access to credit, but it must be done responsibly. Consumers have the right to demand transparency, fairness, and respect from lenders. These rights are not just principles—they are enshrined in law.”
Here are six key consumer rights in the microfinance industry, aligned with the Consumer Act and the National Credit Act, that every South African should know:
1. Right to information
Consumers have the right to receive clear, accurate, and comprehensive information about credit products before entering into an agreement. This includes a pre-agreement statement and a quotation that outlines the loan amount, interest rates, repayment terms, and any additional fees.
“Never sign a credit agreement if you don’t fully understand the terms. It’s your money, and you have the right to know exactly what you’re committing to,” says Gopichand.
Van Pletzen adds; “Credit agreements must be in plain language. If the terms are confusing, you have the right to demand clarity. This isn’t just a courtesy—it’s your legal right.”
2. Right to fair treatment (treat customers fairly)
The NCA mandates that lenders treat consumers fairly and ethically. This includes conducting affordability assessments to ensure that loans are granted responsibly. Consumers have the right to ask how their affordability ranking was calculated and to challenge any unfair practices.
“Reckless lending can trap consumers in endless debt cycles. Lenders must ensure that loans are affordable, but consumers also have a responsibility to be honest about their financial situation,” explains Gopichand.
3. Right to privacy
Your personal and financial information must be handled with the utmost care. Lenders are required to protect your data and use it only for the purposes of assessing your credit application. You have the right to know how your information is being used and to object to any misuse.
4. Right to an understanding of terms
Credit agreements must be transparent and easy to understand. Consumers have the right to receive all relevant documentation in a language they understand and to ask questions about any terms or conditions that are unclear.
Understanding your credit agreement is not optional—it’s your right. If something doesn’t make sense, ask for clarification before signing.
5. Right to responsible lending practices
Lenders are legally obligated to follow responsible lending practices, including conducting thorough affordability assessments and ensuring that loans are suitable for the consumer’s financial situation. Consumers have the right to challenge any lending practices that appear reckless or unethical.
“Responsible lending protects both the consumer and the lender. It ensures that credit remains a tool for financial empowerment, not a burden,” says Gopichand.
6. Right to financial education
Consumers have the right to access financial education and resources that help them make informed decisions about credit. This includes understanding the implications of taking on debt, managing repayments and improving financial health.
Financial literacy is a powerful tool. When consumers understand their rights and responsibilities, they are better equipped to navigate the credit landscape.
Gopichand urges consumers to avoid unregulated lenders, such as mashonisas, who often impose exorbitant interest rates and unethical practices. “Always verify that your lender is registered with the National Credit Regulator (NCR) and the MFSA. Dealing with a trusted, regulated provider ensures that your rights are protected and that you’re treated fairly,” he concludes.
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