Should All Natural Persons Standing Surety Be Protected by the National Credit Act 34 of 2005?* MICHELLE KELLY-LOUW** University of South Africa 1 Introduction The National Credit Act 1 provides full protection to natural persons who stood surety for credit agreements entered into on or after 1 June 2007 2 by other natural persons, stokvels, or trusts where there are only one or two individual trustees and that are governed by the Act, irrespective of the amounts involved. The Act provides limited protection to natural persons who have provided surety for small and intermediate 3 credit agreements concluded with certain juristic persons, as defined in s 1 of the Act, 4 whose asset value or annual turnover, together with the combined asset value or annual turnover of * This article is based on a paper delivered at the Society of Law Teachers of Southern Africa’s 2012 Conference held in Port Elizabeth on 10–14 July 2012. ** BIuris LLB LLM LLD (Unisa), Dip Insolvency Law and Practice (UJ). Professor in the Department of Mercantile Law, School of Law, University of South Africa. 1 Act 34 of 2005. Hereinafter ‘the National Credit Act’ or simply ‘the Act’. In this article words in the singular also mean in the plural and vice versa, and words in the masculine also mean in the feminine and neuter. 2 Although the National Credit Act had already been assented to by the President on 15 March 2006 (see GN 230 in GG 28619 of 15 March 2006), the different portions of the Act were phased in over a period of twelve months. The Act came into operation in three phases (see Proc 22 in GG 28824 of 11 May 2006): • A large part of the Act came into operation on 1 June 2006 (see ss 1–25, 35–59, 69, 73, 134–162, 164–173 and Schedules 1–3). This included the provisions that dealt with the scope and application of the Act; the establishment and functions of the National Credit Regulator; and the registration requirements and procedures for the role-players (credit providers, debt counsellors and credit bureaux). The provisions dealing with the establishment of a National Register of Credit Agreements; the review, verification, correction or removal of consumer credit information held by credit bureaux; dispute settlement other than debt enforcement; searches, offences, jurisdiction of courts, evidence and procedural matters; repeal of laws and the rules for dealing with conflicting legislation; the promulgation of regulations; transitional provisions; and the consequential amendments to other pieces of legislation also came into operation during the first implementation phase. • On 1 September 2006, the National Consumer Tribunal was established and all the relevant enabling sections of the Act came into operation (see ss 26–34). Certain provisions dealing with the consumer credit information held by credit bureaux, the duties of credit bureaux, the confidential treatment of consumers’ personal and credit information, and consumers’ right to challenge the correctness of such information also came into operation during the second phase (see ss 67–68, 70 and 72). • The remaining sections of the Act, and probably the most controversial sections, came into operation on 1 June 2007 (see ss 60–66, 71, 74–133 and 163). These included the sections dealing with the basic credit rights of consumers; credit marketing and advertising practices; over-indebtedness and reckless lending; consumer credit agreements; the permitted interest rates and other costs of credit; collection and repayment of credit agreements; the debt collecting procedures; and the training of employees and agents by credit providers. 3 See the discussion of these categorisations in footnotes 50 and 51 below. 4 See the definition of ‘juristic person’ in s 1 read with ss 4 and 6. See also the discussion of this in par 3 below. © 2012. All rights reserved. Cite as: (2012) 24 SA Merc LJ 298–322. 298