Consumer watchdog Summit has withdrawn all assisted and initiated court and National Credit Regulator (NCR) cases it brought against Capitec.
The principle contention in these cases was against Capitec's Multi Loan product, which the bank discontinued in February 2016.
Summit Financial Partners' CEO, Clark Gardner, told Fin24 on Friday that it was a tough decision to settle with Capitec.
"Summit has always been about the consumer. The last six months or more, Summit and Capitec have been talking about how to improve the industry," said Gardner.
"Our view has been, after much deliberation, that it is in the best interest of consumers for Summit and Capitec to work together. None of the cases of complaints we had lodged had been decided on by the courts yet."
He said Summit and Capitec would now work on improving the unsecured lending industry in South Africa, in order to see how debt relief can be provided for consumers.
"We are really taking it seriously, and want a healthy unsecured lending industry in the country," he said.
Summit's primary concern with Capitec's Multi Loan product was the manner of the agreement, according to Gardner.
"To Capitec's credit, it stopped the product soon after our case had started, and the regulator also gave them a clear bill of health. So we concluded a forward-looking agreement where we will clean up the industry together from within.
"I am happy that we can be a positive force for change and consumers will come out far better."
André du Plessis, Capitec's chief financial officer, told Fin24 on Friday that the bank as well as Summit spent a few years disagreeing on issues pertaining to the Multi Loan product.
"Both sides believed they had strong arguments. So, instead of continuing [to pay] high legal costs on something that is going nowhere in the courts, we decided to use our combined efforts on positive initiatives that will benefit the consumer," said Du Plessis.
"We will spend our money and resources on a programme to improve consumer financial literacy and consumer debt relief solutions. There is generally a lack of financial education in the market. Both Capitec and Summit believe we can help to address this."
He said Capitec does not believe there was anything "wrong" with the Multi Loan product, although it has since been discontinued.
"We now offer a credit card and a facility product to fulfil the needs of our clients," he explained.
The initiative with Summit will include programmes to improve consumer financial literacy, providing effective consumer debt relief solutions and building consumer financial capabilities.
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