With growing consumer confidence about their financial future, access to credit is deemed essential for achieving financial goals. However, the rising demand for personal loans, credit cards, and "buy now, pay later" services is causing financial hardships for some, says Howard Gabriels, credit lead ombud at the National Financial Ombud Scheme (NFO).
"As the New Year unfolds, many South Africans are grappling with financial distress and uncertainty about their financial rights, exacerbated by over-indebtedness and complex credit agreements," Gabriels says.
He says the NFO is ready to assist, offering free alternate dispute resolution to ensure financial fairness and transparency.
"With the Government of National Unity bringing hope and optimism; the easing of inflation; and an interest rate cut; consumers are gaining greater financial stability. Thus many consumers access credit for individual and family economic stability," he says.
According to TransUnion, South Africa’s credit market had an outstanding balance of R2.37 trillion in the second quarter of 2024.
The NFO’s Credit Division handles non-bank credit disputes, including store accounts, microloans, and non-bank home loans. Gabriels says it is important to regularly review credit reports to prevent identity theft and improve credit standing.
"Many South Africans are still unaware of the importance of regularly reviewing their credit reports. An estimated 87% of South Africans who take credit have errors on their credit reports which can adversely affect a consumer’s creditworthiness," he says.
Identity theft has surged significantly, with a 400% increase in 2024, highlighting the need for vigilance, Gabriels says.
He urged consumers to check their credit reports to detect inaccuracies and potential fraud. He also emphasized the responsibility of credit providers to assess affordability before granting credit.
"Creditors who lend irresponsibly and recklessly to consumers who cannot afford repayments will also be held accountable," Gabriels says. The NFO encourages all South Africans to review their credit reports, understand their rights, and seek assistance if treated unfairly in the credit space.
PERSONAL FINANCE