The National Credit Regulator v Standard Bank of South Africa Limited

Standard Bank of South Africa Limited made home loans to purchasers, which were initially regulated by the Usury Act 73 of 1968. The Usury Act limited administration fees that could be charged to borrowers (R5.00 per month under paragraph 3(b)(i) of the Schedule). The Usury Act was repealed and replaced by the National Credit Act 34 of 2005, which similarly regulated 'service fees' (set at R50 per month at the time of the application). A dispute arose over whether the limitation on administration fees imposed under the Usury Act continued to apply to existing home loan agreements after the National Credit Act came into operation. Standard Bank contended that the limits on administration fees for existing loans did not survive the transition to the new Act, leaving such fees unregulated for existing loans.

• Whether the restriction on administration fees imposed under paragraph 3(b)(i) of the Schedule to the Usury Act 73 of 1968 survived the transition to the National Credit Act 34 of 2005 in respect of existing home loans
• Whether paragraph 7(2) of Schedule 3 to the National Credit Act preserved the rights and obligations relating to administration fees under the Usury Act
• Whether the restriction on administration fees constitutes a 'right or entitlement' or 'obligation' within the meaning of the transitional provisions

The appeal was upheld with costs, including costs of two counsel. The order of the court below was set aside and replaced with: (1) A declaration that the respondent is not entitled to charge an administration fee on housing loans that existed at the time the National Credit Act 34 of 2005 came into operation in excess of the fee provided for in paragraph 3(b)(i) of the Schedule to the Usury Act 73 of 1968 unless and until that fee is amended under the powers conferred by section 105(1) of the National Credit Act; (2) The respondent to pay the costs of the application including the costs of two counsel.

The binding legal principle established is that paragraph 7(2) of Schedule 3 to the National Credit Act 34 of 2005 operates to preserve rights, entitlements and obligations created under the Usury Act 73 of 1968, including the limitation on administration fees for existing housing loans. A statutory restriction on fees creates both an entitlement for borrowers not to pay more than the prescribed amount and an obligation on lenders not to charge more, which constitute 'rights or entitlements' and 'obligations' within the meaning of the transitional provisions. These preserved restrictions remain in force for existing loans until amended by the Minister under section 105(1) of the National Credit Act. The transitional provisions should be construed broadly to sweep up all rights and obligations not specifically provided for elsewhere, rather than parsimoniously leaving some regulatory provisions behind.

Nugent JA observed that it would be extraordinary if the drafter of the National Credit Act had chosen to terminate regulation of administration fees on existing home loans, given the tight regulation of such fees under both statutes. The Court noted that even counsel for the Bank accepted this could not have been done intentionally, but submitted instead that any gap in regulation was inadvertent. The Court also commented that it was not necessary to impose a restraint on a reputable bank against acting unlawfully, and that a declaration of the legal position would suffice. The judgment also noted that the transitional provisions in Schedule 3 demonstrated that the drafter was well aware that regulation of existing agreements required specific provision.

This judgment is significant for South African consumer credit law as it clarifies the application of transitional provisions when credit legislation is replaced. It establishes that regulatory protections for borrowers (such as fee caps) are preserved through statutory transitions unless expressly removed. The decision prevents a regulatory gap that would have left existing home loan borrowers without protection against excessive administration fees. It demonstrates the courts' approach to interpreting transitional provisions broadly to preserve consumer protections and avoid unintended consequences. The case provides important guidance on the interpretation of the National Credit Act's transitional provisions and the preservation of rights and obligations under repealed legislation. It reinforces the principle that consumer protections should not be lost inadvertently during legislative transitions.