NCR gets order on finance firm

On 6 December 2007, the National Credit Regulator (“NCR”) brought an application on an urgent basis in the High Court in Cape Town for the provisional liquidation of Rudco Finance (Pty) Ltd.

An investigation in July and August 2007 revealed that Rudco takes repayments from consumers upfront for periods of 6 to 12 months, with the promise to provide loans in a future date, which promise was not upheld by Rudco.

The NCR issued a compliance notice in terms of the National Credit Act to Rudco on 13 August 2007. However, the NCR did not stop there and subsequently obtained an order from the National Consumer Tribunal on 23 November 2007.

The Tribunal, amongst others, ordered that Rudco to refund all affected consumers who have made monthly payments without receiving any loans. According to Mr Visagie of Rudco this entails about 1800 consumers with repayments of R7 million. Such repayments should have been effected by 12:00 on 23 November 2007. Rudco has not complied with the Tribunal order and the NCR has been inundated with calls from consumers complaining that they have not received their repayments. Rudco has also not provided the NCR with progress report on repayments made to consumers.

The non-adherence by Rudco with the Tribunal order constitutes a criminal offence, which in terms of the National Credit Act is punishable with a fine or with imprisonment not exceeding 10 years or to both a fine and imprisonment. The NCR has alerted the Scorpions of the non-compliance by Rudco with the Tribunal order.

The NCR approached the High Court in Cape Town to obtain a liquidation order against Rudco. Two consumers intervened in the proceedings in support of the NCR application, claiming that Rudco “has preyed on the financially marginalized to unlawfully enrich itself by deceit”. The NCR informed the court of the investigation it has conducted and the subsequent action, including instructions to Rudco, a Compliance Notice and the order made by the Tribunal. The Court was also informed that Rudco has failed with every opportunity to repay the affected consumers. The NCR therefore had to approach the High Court in an attempt to obtain some relieve for the already debt ridden consumers.

The High Court ordered provisional liquidation of Rudco with a return date of 16 January 2008. On this day, Rudco and parties with a vested interest must indicate why Rudco should not be finally liquidated. The Master of the High Court will appoint a provisional liquidator early next week. The liquidator will take charge of Rudco's business, attach all records and books of the company and secure property and funds in Rudco's bank accounts. Rudco may therefore not proceed with its normal activities. The liquidator will then proceed with an enquiry in terms of the Companies Act.

The NCR wishes to assure both consumers and credit providers that it takes its mandate as regulator of the credit industry seriously and will not hesitate to take appropriate steps to ensure compliance with the National Credit Act.