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Last week was a bad week for the country’s credit regulators. First up was the constitutional court’s ruling on emolument attachment orders (EAOs), which highlighted flaws in the legislation that resulted in low-income consumers being subjected to abusive debt collection practices. Then came the national consumer tribunal’s ruling on Lewis Stores’ dodgy (turns out illegal) selling of unemployment insurance, which set out clearly the restrictions on the sale of unemployment and disability insurance and found Lewis had contravened the National Credit Act (NCA) on both fronts.

The rulings will change unsecured lending practices, whether in the form of cash or furniture, forever. This is not least because a judge of the high court has ordered government to ensure consumers know their rights.

Inevitably, given human nature and the drive to make profit, it will not wipe out abuse, but it will make things more difficult for abusers. And anyone thinking they might be able to devise new forms of abuse should know they are up against an energetic and newly invigorated team at Summit Financial Partners, which is on a mission to clean up unsecured lending.

Summit was involved in both cases, and CEO Clark Gardner has made no secret of his determination to track down debt collectors who have issued EAOs illegally and to continue investigating possible contraventions of the NCA at Lewis.

The common theme in both cases is that the regulators are not up to the admittedly tough task of protecting the most vulnerable members of our society from unscrupulous lenders.

Winding through this common theme is the fact that it was down to civil society to demand the protection that is promised by various pieces of legislation, namely the constitution, NCA and Magistrates’ Court Act.

In hindsight, government’s ambitious and commendable intention of promoting financial inclusion while protecting low-income consumers from unscrupulous lenders looks totally unrealistic when stacked against its capacity for organisation.

Those of a charitable disposition say the design of the regulatory system is inappropriate and regulators do not have sufficient resources. The national consumer tribunal, at the apex of the system, is effectively prevented from dealing with major cases because it is overwhelmed with more than 1,000 applications for debt rearrangements that have to be considered each week. The National Credit Regulator (NCR) is also obliged to devote itself to copious amounts of minutiae.

Those of a less charitable disposition say the regulators are not sufficiently robust and spend too much of their resources on meetings discussing the problems they never seem to get around to dealing with.

The reality is that the constitutional court should never have had to rule on EAOs.

Its ruling, issued last week, came eight long years after the University of Pretoria drew the world’s attention to the problem in its report, "Incidents of and Undesirable Practices Relating to Garnishee Orders in SA". It was a chilling report that contained details about the damage wreaked on consumers by unscrupulous lenders.

Even in 2008, the content of the university’s report was not new. The media regularly carried reports about how lives were being destroyed by what were frequently unlawful EAOs.

And yet the regulators seemed incapable of addressing the problem. Amendments to relevant laws made their slow, fitful way through the parliamentary process, formed more by the lobbying pressure of the lenders than the needs of low-income borrowers.

Across the country it seemed lenders of all shapes and sizes were able to outmanoeuvre the regulators. Apart from occasional, high-profile swoops on generally small offenders, the regulators seemed unable to tackle the problem. Frequently they seemed not to even know the extent of it.

For the department of trade & industry and its NCR, the most damning aspect of last week’s constitutional court ruling was that it was the result of determined efforts by nongovernmental groups with no assistance from government.

Stellenbosch University’s Legal Aid Clinic, Webber Wentzel’s pro bono practice, businesswoman Wendy Appelbaum and Summit Financial Partners decided they had listened to one too many gruesome stories about EAOs. No longer prepared to wait for the regulators to take action, in September 2014 they launched their own court case against 13 credit providers and law firm Flemix & Associates, which had administered their EAOs.

There’s no doubt that some borrowers are as unscrupulous as lenders, but these are in the minority.

The 15 individuals involved in the constitutional court case told the more common story of lives destroyed by abusive debt collection practices. The court ruled that the magistrate’s court must in future satisfy itself "that it is just and equitable that an emolument attachment order be issued and that the amount is appropriate".

The court also upheld the earlier ruling by judge Siraj Desai that EAOs can only be issued at a magistrate’s court in the area where the debtor lives or works.

The following day the national consumer tribunal slapped furniture retailer Lewis with an order that is set to greatly inconvenience the group in the months to come.

Whatever the fine or cost of reimbursing customers who were forced to pay for services they should never have been offered, much of the energies of the Lewis board will be tied up trying to deal with the fallout from the order for the next several months.

Lewis, which has issued a statement saying it is considering its options, is expected to appeal the ruling. If so it will be a tough, high-profile appeal made all the tougher by the knowledge that a second round of charges against Lewis is in the tribunal pipeline.

The case, which was referred to the tribunal by the NCR in July last year, was based on a complaint laid by Summit Financial Partners.

Last week’s ruling was the tribunal’s first against a large and listed company.

Jacqueline Boucher, manager of investigations and enforcement at the NCR, says it is very happy with the tribunal’s well-reasoned order. The regulator has indicated it wants a R10m penalty imposed on Lewis, in addition to repaying customers who were mis-sold employment insurance.

A second judgment against Lewis could come with a substantially higher penalty.

Boucher contends criticisms of the NCR are misplaced: "We’ve put huge effort into conducting multiple investigations and there is a lot more compliance with the NCA now." She says the NCR’s referral rate to the tribunal is high, but would not give details.

Retail analyst Syd Vianello says companies will look to other sources to protect their bottom line. If insurance, extended warranties, club fees and delivery fees are squeezed out because they’re found to be illegal, then unsecured lenders will start charging for phone calls, SMSes and whatever else is involved in tracking down debtors. If they are unable to attain the margins deemed necessary for the risks involved, retailers will switch out of credit sales into cash-only ones.

Vianello says this will disadvantage low-income consumers, a point Gardner disputes.

"The cost of this sort of credit is so high and the consequences often so devastating consumers are better off without it," says Gardner.