Behind the statistics in the National Financial Ombud Scheme’s latest annual report are real disputes involving real consumers.
The Credit Division’s case studies range from an unlawfully retained vehicle and disputed fraud listings to excessive credit terms and billing practices that left consumers paying more than they should.
Each dispute is unique, but together they show how easily things can go wrong when legal requirements, internal procedures, or basic communication breakdown.
Vehicle retained without legal authority
A dispute involving a financed vehicle illustrates how quickly matters can escalate when legal processes are not followed.
The consumer entered a vehicle finance agreement. The vehicle later experienced mechanical failure, forcing it off the road. While the vehicle remained parked at the dealership, the account fell into arrears.
What followed became the centre of the dispute. The credit provider refused to release the vehicle unless the arrears were settled, leaving the consumer unable to regain possession of the asset. As time passed, the arrears continued to grow, and additional monthly charges accumulated on the account.
When the matter reached the NFO, the investigation found there had been neither a voluntary surrender of the vehicle by the consumer nor a court order authorising its retention under the National Credit Act (NCA).
In other words, although the vehicle had effectively been taken out of the consumer’s control, the legal steps normally required before a financed asset can be repossessed or retained had not been followed.
The NFO found that the vehicle had been retained without legal basis, contributing to the escalation of arrears and placing the consumer in an increasingly difficult financial position.
The matter was ultimately resolved through a full write-off of the outstanding balance and the removal of adverse credit information.
The case serves as a reminder that credit providers may not repossess or retain financed goods without following the legal processes prescribed by the NCA, even when a consumer is in arrears.
When a credit agreement becomes disproportionate
A second case centred on a consumer who challenged a decision by a credit provider to extend a credit agreement by 24 months after the account fell into arrears.
According to the report, the extension was introduced as part of a recapitalisation process intended to help the consumer meet repayment obligations following a default. In effect, the debt was restructured and the repayment period lengthened.
The consumer, however, argued that the extension was excessive and did not reflect the actual circumstances of the account.
When the NFO investigated the matter, it found that the arrears amounted to roughly three months’ instalments, and the consumer had continued making payments on the account. The evidence did not support the need for such a lengthy extension.
The ombud concluded that the additional 24 months were disproportionate to the level of arrears and could not be justified by the consumer’s financial position.
The dispute was ultimately resolved when the credit provider agreed to close the account and issue a paid-up letter.
While credit providers often restructure debt to assist struggling consumers, the case illustrates that such measures must remain reasonable and proportionate to the circumstances they are intended to address.
Fraud listings require evidence
Two of the report’s case studies dealt with fraud-prevention listings and the potentially serious consequences they can have for consumers.
In the first matter, a consumer challenged a fraud-prevention listing that stemmed from an allegedly fraudulent loan application.
The credit provider maintained that bank statements submitted as part of the application process had been altered and relied on a fraud alert it said had been received from the bank.
The listing effectively labelled the consumer a fraud risk, with potentially significant consequences for future access to financial services.
When the matter came under scrutiny, however, the provider was unable to produce the documentary evidence needed to support its position. It could also not provide confirmation from the bank that the documents had in fact been manipulated.
Without evidence to substantiate the allegation, the basis for the listing fell away.
The provider subsequently agreed to remove the fraud-prevention listing.
The case serves as a reminder that allegations of fraud carry serious consequences and cannot rest on assumptions, undocumented warnings, or information that cannot later be produced and verified.
A second fraud-related matter involved a consumer who found herself listed on the Southern African Fraud Prevention Service (SAFPS) database after a credit provider concluded that fraudulent documentation had been used in a loan application.
The consumer denied any involvement in the application and maintained that someone else had used fraudulent documents in her name.
The investigation uncovered evidence that cast doubt on the provider’s conclusion. Biometric verification records placed the consumer at a different location from the one associated with the loan application, making it unlikely that she had participated in the transaction.
Based on the available evidence, the NFO concluded that the consumer had neither submitted the application nor supplied fraudulent documentation.
The listing was subsequently removed.
The case highlights the importance of careful investigation before consumers are flagged as fraud risks, particularly where identity theft or impersonation may be involved.
When billing continues after default
Another complaint involved a consumer who stopped paying a contractual account after experiencing financial difficulties.
What initially appeared to be a straightforward collections matter became a dispute over the growing balance on the account.
Although the account had effectively become inactive and had been handed over for collections, monthly billing charges continued to be added over an extended period. As a result, the amount owed continued to increase long after the consumer had stopped using the service.
The consumer later challenged the outstanding balance, arguing that the continued charges were unreasonable.
When the NFO investigated the matter, it found no clear justification for the ongoing billing. Internal records indicated that collection action should have commenced after three months of non-payment, yet charges continued accumulating beyond that point.
The investigation ultimately resulted in the account being recalculated. Charges that accrued after the account should have entered the collections process were removed, and the outstanding balance was adjusted accordingly.
The consumer accepted responsibility for the revised balance and agreed to repay the amount owing.
The case illustrates how administrative and collections processes can have a significant impact on consumers’ financial obligations and highlights the importance of applying those processes consistently and fairly.
More than individual disputes
Although the five cases involve very different circumstances, they disclose several recurring themes within the credit industry.
In some matters, consumers found themselves disadvantaged because prescribed legal processes were not followed. In others, disputes arose because records were incomplete, evidence could not be produced, or internal procedures were applied inconsistently.
Several cases also highlight the challenges faced by consumers who are already under financial pressure and may struggle to navigate complex credit agreements, collection processes, and fraud-prevention mechanisms.
These are precisely the types of disputes that increasingly find their way to the NFO.
As the Credit Division noted in its annual report, the role of the credit ombud is evolving beyond traditional contract disputes and increasingly involves protecting consumers from the growing impact of financial crime, administrative failures, and procedural unfairness.
