You need to know your consumer rights to make the right financial decisions

It is important that consumers know their rights so they can make better informed decisions, especially in the financial services sector. Picture: Karen Sandison/African News Agency (ANA)

It is important that consumers know their rights so they can make better informed decisions, especially in the financial services sector. Picture: Karen Sandison/African News Agency (ANA)

Published Mar 28, 2023


South Africans celebrate Human Rights Month in March but do they know about their consumer rights.

Consumers have a wide range of protection in the form of legislated consumer rights that have developed over many years into the framework that people know today.

Reana Steyn, the ombud for banking services, said: “Over the years, this has been vital, particularly in the financial services sector.

“Despite these rights, over the past few years we have seen that there are major corporates and scam artists that are very willing to take advantage of the public without a second thought.”

Here is a closer look at the rights that consumers have on credit, negotiating interest rates, insurance and debt.

Consumers’ right to apply for credit

The National Credit Act (NCA) states that all adult natural persons, and every juristic person or association of persons, has the right to apply for credit.

However, the act also acknowledges the rights of banks to refuse to enter into an agreement with a consumer as long as there are reasons for the refusal. The refusal needs to be reasonable and consistent with the law and the banks’ risk appetite.

“For example, the bank would be within its right to decline any application for a home loan based on lack of affordability,” Steyn said.

The right to insurance

Insurance is a must-have to protect yourself from a range of personal risks, especially in a time of crisis, according to Wynand van Vuuren, the head of client experience at King Price Insurance.

Van Vuuren said: “In recent years, insurers have been working hard to become more customer-centric, making it easier than ever for consumers to do business with them.”

While insurers work on the consumers who are the centre of their business, it is essential that consumers know their rights too.

Treating Customers Fairly (TCF) is legislation that governs the manner in which all financial service providers, including insurers, handle their clients.

According to the TCF, consumers have the right to:

– Receive fair treatment by their insurance provider and to feel confident that fairness is at the heart of the insurer’s culture which includes having claims handled quickly and fairly.

– Know that they are being sold the right products that suit their needs.

– Clear information about the insurance policy, and to have the insurance cover explained in simple terms that are easy to understand.

– Have no barriers to being able to change or cancel an insurance policy at any time, or to make a complaint if they are not happy.

– The right to register a dispute with the ombudsman for short-term insurance.

Right to negotiate for a better interest rate

Consumers may dispute the interest rate that they have been charged on their loan accounts as they may feel that the interest rate is too high.

One of the challenges is that the consumers lodge their complaints after they have signed acceptance of the terms and conditions of their loan agreements with the credit provider.

Steyn said: “Unfortunately, unless the interest rate applied by the bank is not in line with the prescribed rate per the NCA, the consumer will be bound by the agreement and there is no way to force the bank/loan provider to renegotiate a better, more acceptable rate for the customer, simply because the terms no longer suit them.”

It is important that consumers know that they have the right to negotiate with credit providers and shop around for a better rate if the interest rate that they are being offered is not aligned with what the consumer thinks is fair.

After thinking over the full terms of the agreement, it is the right of a consumer to refuse the interest rate that has been offered and negotiate for a better rate.

“Furthermore, consumers are also not forced to accept the amount initially requested and offered by a credit provider. They have the right to request for the amount to be reduced and be in line with what they believe will be affordable for their pockets,” Steyn said.

If you are in debt, know your rights

If consumers are experiencing over-indebtedness then they have the right to apply for a legal, recommended service and process called debt review, according to Neil van der Walt, marketing manager, DebtSafe.

Van der Walt said that the debt review process helps consumers when they can’t make ends meet, to keep up with their debt payments.

Here’s a look at how the debt review process works:

– The debt review process starts with a consumer approving the process and completing the application form (Form 16).

– The process then goes through administrative procedures that are handled by a registered debt counsellor.

– Then the National Credit Regulator (NCR) will then issue a clearance certificate to complete the process.

“Debt counselling provides an effective means to pay back what you’ve borrowed in a structured and affordable way,” said Benay Sager, head of DebtBusters.

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