Abstract
M.Com. (Business Management)
The aim of this research study is to investigate the effect of the National Credit Act on a micro-lending financial institution, namely Old Mutual Finance. The objective of the study is to gain insight from Old Mutual management staff on how their sales and operations have been affected since the inception of the Act and to reflect on their experiences and perception regarding the Act. The study also assesses Old Mutual Finance customers’ level of awareness and perceptions regarding the Act.
The purpose of the National Credit Act is to promote and advance the social and economic welfare of South Africans, promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and to protect consumers.
A mixed model research was used where both qualitative and quantitative data collection techniques and analysis procedures were used and combined. For qualitative data collection, five senior management staff of Old Mutual Finance were interviewed. This entailed face-to-face interviews which were semi-structured, their responses were manually written and also digitally recorded. The quantitative method involved the use of a survey of two hundred and thirty two of their customers from four different Old Mutual Finance branches located in Johannesburg.
The results of the study indicate that the National Credit Act is considered to be appropriate legislation with good intentions. However, some aspects of the legislation need to be addressed to ensure that credit providers are able to smoothly implement its rules and regulations in the lending market. Concerns pertaining to the lack of consumer knowledge or low financial literacy were also raised.
Using the promax rotation and eigenvalues exceeding one, three factors namely, Knowledge of the Act, Attitudes towards the Act and Perception towards credit in general were identified which together explained the 47% of the variance for the entire set of variables. These three factors corresponded to the themes of the customer questionnaire.