Credit regulator loses to furniture retailer Lewis in court - again

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The Supreme Court of Appeal last week dismissed an appeal by the National Credit Regulator in a drawn-out legal battle against major furniture retailer Lewis Group.

The regulator's appeal was dismissed with costs, including the costs of two counsel, Lewis said in a statement issued on the JSE Stock Exchange News Service.

The NCR – an agency of the Department of Trade and Industry – oversees the regulation of the South African credit industry.

The Supreme Court of Appeal bid was the latest appeal by the regulator, who previously approached the high court in Pretoria. In August 2019, upon announcing that it had been granted leave to appeal, the NCR said it was pleased the matter would be "finally determined".

"The charging of unlawful fees on credit agreements is one of the most egregious breaches of the National Credit Act (NCA)," the regulator's CEO Nomsa Motshegare said at the time.

In the regulator's view, "club fees" Lewis was charging monthly, were an undeclared extra fee consumers had to pay in order to secure credit. It also took issue with certain "extended warranties" sold by the group.

In some cases, the regulator argued these did not add value to consumers on the basis that the dates – usually where there was a problem with record keeping regarding the purchase date – overlapped with supplier warranties.

It wanted Lewis to reimburse consumers for club and membership fees it claimed were charged unlawfully, dating back to 2007. It also wanted Lewis to refund customers for costs and maintenance agreements it claimed were unlawfully charged and ran concurrently with supplier or manufacturer warranties, or had no term or period.

For its part, Lewis said its club was not a necessary condition for getting credit, which it said was proven by the fact that the majority of customers who held loans were not club members. It also said its customers who opted to take out an extended warranty had this benefit for two years after the supplier's warranty.

According to the judgment, Lewis had consistently honoured extended warranties, the court found.

There was also no evidence that the amount charged for the warranties was excessive, the judgment added.

Furthermore, there was no apparent relationship between club membership and credit agreements with Lewis customers, the court noted.

In its statement on SENS, Lewis said it was pleased the appeal had been dismissed by the Supreme Court of Appeal.

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