Staff Loans and the National Credit Act

By: admin

An agreement qualifies as a credit agreement if a payment obligation is deferred and a charge, fee or interest is payable to the credit provider. As a result, if a loan taken by an employee is repayable with interest this falls in the scope of the NCA and the employer will need to register as a credit provider. This includes salary advances, traditional loans and employee share ownership schemes.

The reality is that most companies don’t have the expertise to assess if employees are able to repay loans or even bother doing the income vs expense affordability exercise, so by allocating a loan is reckless lending.

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