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New Credit Life Insurance Regulations from 10 August

Registered credit providers should note that the long-anticipated credit life insurance regulations will come into effect on 10 August 2017 (“Commencement Date”).

On 9 February 2017, the Minister of Trade and Industry, Dr Rob Davies, published the final credit life insurance regulations under Government Gazette Notice No 103, in the Government Gazette No 40606 of 2017(“Regulations”). The Regulations will only affect the credit agreements entered into on or after the Commencement Date.

The Regulations set the maximum limits per life insured (including the cost of any commission, fees or expenses in relation to that insurance) that a credit provider may charge a consumer calculated on the deferred amount, being:

Credit Type Maximum prescribed cost
Mortgage agreements (other than affordable housing) R2 per R1 000
Mortgage agreements (affordable housing) R2 per R1 000
(consumers < 55 years)

R2.50 per R1 000
(consumers > 55 years)

Credit facilities

Unsecured credit transactions

Short term credit transactions

Developmental credit agreements

Other credit agreements

R4.50 per R1 000
If the policy provides for additional benefits in the event of temporary disability and the consumer being unable to earn an income The above costs may increase by R1 per R1 000 for both benefits

Credit providers need to ensure that its current practices relating to credit life insurance are aligned with the Regulations. With the National Credit Regulator (“NCR”) actively investigating credit providers that charge so called ‘club fees’ in contravention with the National Credit Act, Act 34 of 2005 (“NCA”) during the past months, one can safely assume that compliance with the Regulations will be next on their agenda.

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