When you hear ‘… is a licensed financial services provider and registered credit provider’ at the end of an ad – what does it mean? How does this impact you? This phrasing indicates that the lender is operating according to the National Credit Act (NCA) and is subject to the National Credit Regulator.

The NCA is one of those laws that we happily ignore, until the day that we need it to make sure justice gets served.

Before the NCA was passed in 2005, it was too easy for unethical lenders to take advantage of people who are often desperate for help. Some lenders took advantage of clients by using difficult language and jargon to confuse them, which could lead them to taking on more credit than they could afford. 

Today, thanks to the NCA, that doesn't happen as easily. Especially when consumers understand what their rights are, and how they're protected. Here’s what you need to know ...

1. It's not a one-way street – you have rights

You have the right to see your credit record and all the information that the credit bureaus have about you. 

You also have the right to have the terms of a loan or credit agreement explained to you in plain and understandable language. And you can ask that the documentation is given to you in one of two official languages.

2. It's all about transparency

All new credit agreements must be transparent about the fees and interest rates that will be charged. The NCA also regulates how much can be charged for fees as well as interest rates for different types of loan.

3. No more reckless lending

The core of the NCA is about promoting responsible credit granting and use. This means that the lender has to do certain checks to make sure that borrowers don’t take on more than they can afford.

The NCA is not just a piece of paper – there are real teeth behind it in the National Credit Regulator

It’s for this reason that your credit record is reviewed to make sure you aren’t borrowing more than you can afford. It’s irresponsible for a lender to grant more credit when you’re already struggling to repay your existing loans.

4. Truth in advertising

The NCA protects you from misleading advertising, prohibiting false statements like ‘no credit checks’ or ‘guaranteed loans’. 

Lenders must also make important information clear in their advertising: details like the interest rate, the number and cost of instalment amounts, and if there are any residual or final amounts to be paid.

It helps you make a more informed decision if you have all the numbers in front of you.

5. Consequences for failure

The NCA is not just a piece of paper. There are real teeth behind it in the National Credit Regulator, the body that makes sure that everyone is playing game. And if your concerns or complaints to the regulator are not answered to your satisfaction, you can contact the Credit Ombudsman. 

While it’s reassuring to have laws and procedures like this to protect us, the first line of defence is always to be as informed as you can be. If you have any questions when applying for credit, ask. There’s no shame in not knowing or understanding everything at once. Take your time, and commit only once you’re happy that the deal is right for you.