Reckless lending in South Africa has generated a consistent body of NCT and High Court findings over the past two years. The available NCT record shows repeated adverse outcomes for credit providers who cannot produce a contemporaneous affordability record. The content of those records (what was verified, how income was assessed, which obligations were counted) is now being scrutinised at a level of specificity that tick-box compliance cannot withstand. For the full regulatory background, see our guide to reckless lending under the NCA.
This is the lender-side account of what recent cases establish and what they require operationally. Consumer-facing accounts of reckless lending are abundant. The B2B picture, specifically what a credit provider must do to avoid a finding, is less documented.
What the NCA says reckless lending actually is
Section 80 of the NCA does not define reckless lending as simply "lending too much." It identifies three discrete grounds, any one of which is independently sufficient for a reckless credit finding:
- (a) The credit provider failed to conduct an assessment as required by Section 81(2), irrespective of what the outcome of such an assessment might have concluded.
- (b)(i) The credit provider conducted the assessment but entered the agreement despite the preponderance of information indicating the consumer did not understand or appreciate their risks, costs, or obligations.
- (b)(ii) The credit provider conducted the assessment but entered the agreement despite information indicating the consumer would become over-indebted.
Ground (a) is purely procedural. A lender who can demonstrate the consumer could have comfortably afforded the credit still loses if no assessment was conducted and documented. This distinction is foundational to how recent cases are being decided. It explains why the enforcement focus has shifted so sharply to record-keeping rather than outcomes.
Section 81(2) sets out what the assessment must cover: the consumer's understanding of their risks and obligations, their debt repayment history, and their existing financial means, prospects, and obligations. Section 81(3) adds that the credit provider cannot shelter behind consumer non-disclosure if they could reasonably have taken steps to verify, including obtaining and analysing a bank statement. The Reg 23A affordability framework operationalises exactly what those verification steps must include.
Employment stability: when gross income is not enough
A 2025 NCT complaint against Motor Finance Corporation (a division of Nedbank) raised a specific issue: the reliability of employment, not just the quantum of income. The consumer was employed on a 10-month fixed-term contract. The affordability assessment relied on gross income without examining whether that income was stable beyond the contract period. While the tribunal dismissed the complaint on procedural grounds (the three-year time bar under the NCA), the underlying question it raised remains live: does Section 81(2)'s requirement to assess "financial means, prospects and obligations" demand scrutiny of employment stability?
The practical implication extends beyond any single case. Payslips confirm current income but say nothing about employment precariousness. A consumer on a short-term contract, a probationary employee, a worker employed through a labour broker: all will produce payslips that look identical to those of permanent employees. The bank statement tells a different story. Irregular income patterns, gaps between salary deposits, or deposits from multiple labour brokers in sequence all signal income that cannot be treated as stable for the purposes of a multi-month credit obligation.
Courts and the NCT are increasingly asking whether the credit provider examined what was reasonably ascertainable, not just what the consumer handed over. Bank statement behavioural signals, including those flagged by tools like behavioural credit scoring, are directly relevant to that question.
ABSA v Goolam: procedural compliance is not optional
In ABSA Bank Limited v Goolam [2025] ZAGPJHC 62, the Gauteng High Court addressed whether sections 129 and 130 of the NCA (pre-litigation enforcement procedures) apply when a bank seeks to enforce a settlement agreement. The court held that they do. ABSA could not locate the original loan agreements and had to rely on secondary evidence from its computer system. The court found the bank's failure to follow prescribed pre-litigation procedures fatal to its claim, notwithstanding the settlement.
For credit providers, the operational lesson is broader than the specific facts. If original loan documentation and assessment records are not retrievable years after origination, the credit provider's enforcement position weakens substantially. The judgment reinforces what NCT cases consistently find: documentation quality at origination determines litigation outcomes years later.
The expense norm question, while not at issue in Goolam, is equally consequential. A credit provider who uses a flat living expense figure across all consumers (R1,500 or R2,000 regardless of household size or income band) is exposed to challenge on the substance of the assessment. A draft amendment to Regulation 23A published in August 2025 proposes mandatory minimum expense norms by income band specifically to close this gap. The audit trail requirement for micro-lenders extends to documenting which expense norm was applied, why it was applied, and what the resulting discretionary income calculation showed. An assessment record that lists income and total obligations but does not show the expense norm applied is incomplete by this standard.
NCT patterns: what the tribunal finds again and again
The NCT's 2024 caseload shows a consistent pattern. In NCR v Ndebele t/a Isidingo Loans [2024] ZANCT 9, the tribunal found that the respondent had disregarded its obligations to conduct affordability assessments entirely. Consumers received small short-term loans without any financial means assessment, obligation calculation, or repayment history review. The tribunal regarded the contraventions as serious, noting these consumers belonged to the most vulnerable sectors of the population. In NCR v Mbhanzima Cash Loans [2024] ZANCT 24, the credit provider had continued granting loans after its registration lapsed, and an individual respondent operated without ever having been registered. The tribunal imposed a R200,000 administrative fine.
NCR v Tsoelli (Pty) Ltd t/a Tswelopele Cash Loans [2023] ZANCT 26 went further. The tribunal found systematic contraventions including lending to SASSA beneficiaries and charging interest rates exceeding legal limits, and cancelled the registration. This is the enforcement escalation that shifts the risk calculus for any registered credit provider: a reckless lending finding on individual agreements is recoverable. Cancellation of registration is not.
Contrast those outcomes with Molepo v African Bank [2024] ZANCT 30. The bank prevailed because a proper assessment had been conducted. The record was complete: it documented income verification through payslips and bank statements, obligation enumeration from the consumer's credit profile, and the discretionary income calculation (the NCR's own independent calculation confirmed a R11,861.50 surplus). The Tsoelli cancellation and the Molepo vindication describe the same compliance standard from opposite directions.
The contemporaneous record requirement
Across all of these cases, the consistent failure mode is not that lenders extended credit beyond the consumer's means (though that occurs too). The recurring failure is that lenders cannot produce evidence of an assessment conducted at the time of origination. Reconstructing an affordability record after a consumer complaint or NCR referral is not equivalent to having made the assessment contemporaneously. Courts and the tribunal treat reconstruction with appropriate scepticism.
Section 81(3)'s “reasonably practicable steps” standard means the assessment must reflect what was done before the credit agreement was entered, not what could have been inferred afterward. A credit provider who obtained a bank statement but did not analyse it before approving the application is in the same position as one who never obtained it: the assessment was not made on the available information.
A CDH alert from November 2023 identified “disregarding information indicating financial stress” as a reckless lending trigger. A bank statement showing gambling spend, loan stacking, or returned debit orders at the time of application is information that was available. Ignoring it, even if the income figure looked adequate, is disregarding available information on financial stress.
Courts demand substance, not procedure
The pattern across these NCT findings, and the direction of High Court commentary on Section 81, points to a consistent standard: the NCA demands substantive assessment, not procedural box-ticking. A credit agreement accompanied by a form that lists income and ticks obligation boxes, but where no real evaluation was made of the consumer's financial position, does not satisfy the affordability assessment obligation. Tribunals and courts are examining whether the assessment engaged with the substance of the consumer's financial situation or merely documented a predetermined outcome.
This places the quality of the assessment evidence under scrutiny. A numeric calculation shows the arithmetic. A documented record that traces the income verification source (payslip, bank statement, or income statement), the obligations identified (bureau-listed and those appearing in the bank statement), the expense norm applied, and the resulting discretionary income figure shows the substance of the assessment. The difference between these two levels of documentation is now legally consequential.
What a defensible affordability record looks like
Drawing the case law together, a defensible record at origination contains six verifiable components:
- Verified income source: payslip, bank statement income credits, or income statement. Not a consumer-signed declaration alone. The source document must be identifiable.
- Employment stability consideration: for fixed-term contract or precarious employment, the assessment record should note this and reflect it in the income treatment.
- Obligation enumeration: bureau-listed obligations plus any debit orders or EFT payments appearing in the bank statement that are not on bureau. The micro-lender audit trail guidance covers the obligation cross-check process.
- Expense norm applied: the specific norm figure used, from which table or methodology, and how it was calibrated to the consumer's income band.
- Discretionary income calculation: the arithmetic must be present: gross income minus statutory deductions, minus obligations, minus living expenses equals available income.
- Timestamp and storage: the record must be dated at origination and retrievable on demand for the required retention period.
AffyScore's decision pack is structured to satisfy Reg 23A evidence requirements. It is timestamped at the point of extraction, documents the income sources identified in the bank statement, enumerates debit orders and their payees, flags behavioural signals including gambling transactions, and produces a discretionary income calculation. When challenged at the NCT or in litigation, the credit provider holds a dated, exportable record showing exactly what was assessed and when. This is the original output, not a reconstruction.
The decision pack is designed to address the six documentation gaps that recur in NCT adverse findings. Whether it satisfies all requirements in a specific context is a matter for the credit provider's legal and compliance team to confirm.
