Affordability assessment

The section 81 obligation to establish that a consumer can afford the credit, based on gross income less statutory deductions, a prescribed minimum expense allowance and existing obligations from the bureau, with documentary evidence retained for every decision.

DebiCheck

The authenticated debit order system in which the consumer authenticates the mandate at origination. It has materially improved collection integrity relative to the legacy debit order environment.

First payment default

A loan that fails to pay its first instalment. Reported weekly by channel; it is a fraud or scorecard signal rather than a credit deterioration signal.

IFRS 9 expected credit loss

The three-stage provisioning model applied to the loan book, with forward-looking macroeconomic overlays, calibrated initially on industry benchmarks and migrated to own-book vintage curves from Year 2.

Initiation fee

The prescribed fee for entering into a credit agreement: R165 plus 10% of the amount above R1 000, capped at R1 050 excluding VAT. Unchanged in nominal terms since May 2016.

NCA

National Credit Act 34 of 2005, the principal statute governing consumer credit in South Africa.

NCR

The National Credit Regulator, which registers credit providers and enforces the Act.

Reckless credit

Credit extended where the consumer did not understand the risk or would become over-indebted. A finding under sections 80 to 84 can suspend the agreement or set aside the consumer’s obligations.

Section 89(2)(d)

The provision rendering a credit agreement unlawful where the credit provider was required to register and was not. A court must declare such an agreement void.

Section 103

The provision setting maximum interest rates. For an unsecured credit transaction the ceiling is the repurchase rate multiplied by 2.2, plus 10 percentage points — 24.85% at a 6.75% repo.

Short-term credit transaction

An NCA category covering small, short-duration credit, carrying an interest ceiling of 5% a month on the first loan in a calendar year and 3% a month on subsequent loans.

Vintage

A cohort of loans grouped by month of origination. Vintage loss curves are the only measure that reveals whether cut-offs are correct while there is still time to change them.