Abstract
The affordability assessment prescribed by the National Credit Act 34 of 2005 did not contain sufficient provisions to allow the credit provider to accurately determine if the consumer could afford the proposed credit agreement. The National Credit Regulations Including Affordability Assessment Regulations sought to address this by requiring credit providers to follow a certain procedure when performing an affordability assessment. Unfortunately, these regulations pose more questions than answers, as well as, still lacking the necessary detail to allow for accurate affordability assessments. Some of the issues that this study will investigate include the question regarding which party should be responsible for performing the mandatory affordability assessments; the requirement regarding standard credit application forms; how to manage and deal with household data; how to value a consumer’s existing and proposed non-fixed payment obligations; the use of buffers to make the consumer more resilient to unexpected/emergency expenditure; the use of interest rate stress testing to ensure that the consumer can afford their obligations should interests rates increase; suitability testing; the study concludes with a proposed model that could be used by the party responsible for performing the affordability assessment.
LL.D. (Mercantile Law)