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1. The appellant, the National Credit Regulator, (“the Regulator”) appeals the whole of the
judgment and the order of the second respondent, the National Consumer Tribunal, (“the
Tribunal”), which was handed down on 8 July 2019. The appeal is brought in terms of
section 148 o f the National Credit Act 34 of 2005 (“the Act”). The Tribunal has elected
not to participate in this appeal. No leave is required for this appeal as section 148 (1) (c)
of the Act provides for an automatic right of appeal in respect of a decision of the T ribunal.

2. The first respondent, JDG Trading (Pty) Ltd ( “JDG” ), a credit lender, offers credit inter
alia, for household goods and furniture, which consumers purchase at retail stores. Upon
an application for credit the consumer is required to purchase credit insur ance for the loans
advanced. A consumer has a choice to either purchase the insurance that JDG Trading
offers, or he/she may obtain and provide his/her own insurance. JDG offers credit life
insurance which includes cover for disability and retrenchment in a bundled form. It is not
disputed that it sold this form of cover to pensioners, disabled persons and consumers
receiving social grants, who were already disabled or unemployed when they signed up
for the credit. Advocate PL Carstensen SC on behalf of th e Regulator submitted that JDG
offered and sold credit insurance as a bundle to people who will never benefit from the
cover, as they will never claim for disability being already disabled or for retrenchment
cover since they are no longer employed. Theref ore, it was contended that albeit allegedly
cheap, the selling of such an insurance cover contravenes the provisions of s 106(2) (a)
and (b) of the Act, in that it is unreasonable, or its cost is unreasonable having regard to
the “actual risk and liabiliti es involved in the credit agreement”. Counsel proffered that
JDG is in terms of section 106(1) of the Act is permitted to offer cover, however the cover
does not comply with section 106(2) of the Act.



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3. The Issue
The issue before this court is whether JDG Trading has contravened sections 106(2), 90(1)
and (2), 91(1) and (2) of the Act. It was submitted that if this court agrees with the Regulator
on a contravention of section 106 (2) (a) or (b), it follows then tha t the remainder of the
sections have been contravened.
4. The Relief Sought
The appellant seeks that:
“2.1 the appeal be upheld;
2.2 the appellant be granted relief sought in prayer 2(a) and 2(b) of the NCR Form
32, dated 6 August 2015 as follows:
2.2.1 it is declared that the first respondent has repeatedly contravened sections
90(1), 90(2)(a)(ii), 91(1), 101 (1)(A) 106(2)(a) and (b) of the Act;
2.2.2 it is declared that the first respondent’s repeated contravention of the aforesaid
sections constitutes conduct prohibited by the Act; and
2.2.3 that the determination of the appropriate administrative penalty and the relief
sought in terms of prayers 2 (c ) and (e) of the NCR form 32, dated 6 August 2015, be
referred to the Tribunal for hearing and adjudication. ”
5. The Black Sash Trust (“BST”) has been permitted to join the appeal hearing, as amicus, in
terms of a judgment by Mia J, dated 20 April 2021. The BST contended that the matter
raises important constitutional issues concerning the right of access to social s ecurity and
social assistance as guaranteed by section 27 of the Constitution of the Republic of South
Africa, 1996 (“the Constitution”). Advocate J Bhima appeared for the BST and contended


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that there is a positive obligation on the state to protect social grant beneficiaries from
exploitation, and a negative obligation on corporate entities to refrain from interfering with
the realisation of rights to social assistance, of the most vulnerabl e members of society. He
proffered that his client is before this court to demonstrate JDG’s insurance cover is
meaningless for consumers reliant on state pensions and disability grants. JDG strongly
objected to the BST’s adducing of evidence, at an appeal stage and argued that it has never
had an opportunity to challenge the contents of a report by an actuary, Professor R Harris,
relied upon by the BST. Advocate C Loxton SC, on behalf of JDG argued very strongly,
questioning both the qualifications of the expert and the content of the report. It was
submitted that the BST had gone beyond the duties of an amicus . He argued that the BST’s
appears to be biased and its evidence, must be disregarded. I shall return to this point later
in the judgment.

6. The Tribunal’s Judgment
On 8 July 2019 the Tribunal delivered its judgment, when it dismissed the Regulator’s
application to declare JDG’s credit insurance policy as prohibited conduct. In paragraph
32 of the judgment1, it stated:
“[t]he Tribunal however wishes to make it clear that it cannot and will not make a
finding that bundled or group insurance is inherently suitable or appropriate. The
Tribunal can only find that the Applicant [the Regulator] was unable to prove that the
credit insurance provided was unreasonable or provided at an unreasonable cost.”
7. The Law
Section 106 (1) of the Act provides:

1 CaseLines (“ CL”) 009-2215


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(1) A credit provider may require a consumer to maintain during the term of their
agreement :
(a) credit life insurance not exceeding, at any time during the life of th e credit
agreement, the total of the consumers outstanding obligations of the credit provider
in terms of the agreement; and
(b) either …
i. …
ii. in any other case, insurance cover against damage or loss of any
property other than property referred to in sub paragraph (i) not
exceeding, at any time during the life of the credit agreement, the
total of the consumer outstanding obligations to the credit provider
in terms of the agreement,”
Section 106 (2) of the Act provides:
“Despite subsection (1) a credit provider must not offer or demand that the
consumer purchase or maintain insurance that is:
(a) unreasonable; or
(b) at an unreasonable cost to the consumer, having regard to the actual
risk and liabilities involved in the credit agreement .”

8. The facts are mostly common cause between the parties. JDG did not deny that it required
credit insurance for loans advanced; it did not deny that the cover it sold included cover
for permanent and temporary disability, retrenchment and loss of employment, and that it
sold this cover to consumers receiving social security grants and unemployed consumers.
Mr Carstensen SC referred the court to the profiles of the various consumers which the


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Regulator referred to as examples and submitted that the cover was meaningless to those
consumers. The consumers who were in the main pensioners, were never going to benefit
from the cover for retrenchment and loss of employment, and the consumer who is
disabled, is never going to claim in terms of the disability cover he/she paid for in the
bundle. It was contended that the cover was unreasonable, inter alia, for this very anomaly.
JDG is at no risk of ever having to pay for a claim in this category and, therefore, JDG’s
“low cost and limited options for consumers for cover” argument, cannot be sustainable.
Counsel argued that one must have regard for the “effect or result” of the insurance cover
offered in the bundle. The pensioner and the young consume r purchase the same insurance,
at the same price, however the young consumer can claim the full benefits of the cover as
opposed to the pensioner or disabled person, for whom the retrenchment or disability cover
is meaningless. Counsel contended that the c ourt must not lose sight of the fact that JDG
is never at risk to pay out benefits to the pensioner for retrenchment or to the disabled for
disability cover, as included in the bundle.

9. Mr Carstensen SC, further, submitted that the provisions of the Act focus on an individual
consumer, not a group. The bundling does not provide the consumer with an option as
contended by JDG, the consumer is obliged to take the full package, including cover for
retrenchment and disability. Counsel reminded the court that when one has regard for the
definition of e.g. retrenchment and how one may qualify for the benefit in the agreement,
it must be unreasonable. In order for a claim to be considered, JDG r equires the pensioner
who claims retrenchment benefits to provide a “contract of employment, a letter from an
employer in regard to his retrenchment”. The consumer will never be in a position to meet
the requirements, as he/she no longer works. A disabled consumer who has a claim must
“produce a medical report from a doctor on the disability and a letter from an employer


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that she/he is disabled .” The consumer is already disabled, is not employed and will never
be able to produce such a letter. The consumers were pensioners or/ and disabled at the
date of the purchase of the insurance, their claims will never manifest. In my view it is
farcical t o refer to a claim for such consumers.

10. Furthermore, it was contended that the Tribunal ought not to have distinguished the matter
of National Credit Regulator v Lewis Stores (Pty) and Another2 (“Lewis Stores”) from
the current dispute, the same reasoning applies to this dispute. The only difference between
the cases is that in Lewis Stores the agreements concluded were for separate cover at
specified costs, whereas in this matter the cover is in a bundle form an d for an all-inclusive
premium. Mr Carstensen SC proffered that if the JDG cover were in terms of the Act, it
would have been unlawful, it attempts to pass muster in this case as part of an insurance
cover. It was argued for JDG, that the applicant did not raise the Lewis Stor es’ case before
the Tribunal and must be restricted to the record before the appeal court.

11. Mr Carstensen SC proffered that the agreements set out that all benefits paid will firstly,
settle the amount outstanding as per the instalment agreement . JDG protects its interests
and justifies relaxation of the interests of a pensioner or disabled persons on the basis that
the cover supports access to credit and is at a low cost. It was submitted that although life
cover may be cheap, the pensioner or dis abled consumers do not fully benefit from the
cover he/she pays for, as other members of the group and the agreement is unreasonable.
The bundle insurance offered, to the group results in cross subsidisation, where the older
members subsidise younger m embers of the group, who benefit more, in that the younger
members will likely require retrenchment and disability cover in their lifetime or work life.

2 National Credit Regulator v Lewis Stores (Pty) and Another NCT/27651/2015/140(1) [2016] ZANCT 33 (9
September 2026)


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12. Mr Bhima for the Black Sash contended that a claim will never manifest. Counsel
submitted that the state has a positive duty to protect grant recipients to realise their rights
in terms of section 27 of the Constitution and private or corporate entities are to refrain
from interfering with the realisation of those rights affor ded in the Constitution. The BST
has been involved in matters of social grants for decades and based on its experience, his
client can with confidence argue that JDG is involved in pre datory practice in this matter.
He rejected submissions of bias by Mr Loxton SC and stated that his client stands by the
content of the report by Professor Harris, and her qualifications to provide her opinion.
However he left it to the court to determine the degree of weight to be attached to the
report.

13. Mr Loxton SC on behalf of JDG, contended that the cover was sold in the form of a bundle,
there was only one premium which included cover for various risks and it was sold as
group cover. This form of cover is the only way to ensure that the price is kept to a
minimum. Counsel argued that the consumer is given a choice to obtain his/he r own cover
but will not find cover any cheaper elsewhere. The price promotes access to credit and can
only be in the interest of the consumer. There is no specified price fo r the cover for
disability, or retrenchment, it is a comprehensive cover at a single cost. Carstensen SC
referred the court to the record where JDG did not deny that there was a cross subsidisation,
where some in the group may derive the full benefit whilst others in the group may not.
However, Mr Loxton SC argued that it is the intrinsic feature of group cover, not unusual
in the insurance industry and reiterated that the consumer gets life cover, which would not
ordinarily be offered to pensioners and di sabled persons, and at a low cost. He reminded
the court that the insurance is convenient as JDG’s qualification requirements, dispenses
with the delays in waiting periods and costs for medical examinations, no medical


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examination is required, which must be seen to be in the interest of the consumer. It was
further argued that the Regulator failed before the Tribunal because it did not provide any
comparative evidence on cheaper products and therefor failed to demonstr ate that the
bundled insurance was unreasonable, or sold at an unreasonable cost. In its heads of
argument JDG at paragraph 2.9 refers to paragraph 23.10 of the findings where the
Tribunal struggled to understand why the Regulator would complain if the bun dled
insurance was cheaper for the consumer than if the consumer had to take out separate
insurance for each benefit.

14. Furthermore, it was contended that the Regulator, only at this appeal stage, relies on
section 90(2)(ii) (a) which provides that provision in the credit agreement is “ unlawful if
its general purpose or effect is to deceive the consumer” , however, it has failed to present
any evidence of deception or even that the agreement has the potential to deceive
consumers. It was contended that there is no evidence of a consumer who was confused or
deceived by the bundled insurance, and therefor its argument must fail , counsel therefor
denied that there was any basis for a finding of a violation of section 90(2) (a)(ii). It was
submitted that the contracts were clear, the price was known, and consumers knew they
had an option to purchase their own cover. It was common cause that the agreements were
clear in the language used and the cost was clearly set out. The Regulator’s argument of
an unlawful provision, is without merit.

15. Mr Loxton SC further proffered that the Regulator’s argument is speculative and
unfounded. It was argued that both the Regulator and the BST are paternalistic in their
approach and they presented no evidence that credit consumers misunderstood the scope
of bundled insurance, no evidence of conf usion o r deception is before the court. He denied
any violation of section 90(2)(a)(ii), and proffered that there was no evidence of any


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inducement; the insurance cover was offered but never required to be taken up; the
consumer had a choice, and a violation of the provisions of section 91 was also denied.
The contention was that the Regulator again failed to provide evidence of the mischi ef and
the appeal stands to be dismissed.

16. Mr Loxton SC submitted that his client seeks costs against the BST, because it its view,
the BST had gone beyond the bounds and purpose of an amicus, it demonstrated a bias and
cannot be seen to have assisted the court. Mr Bhima argued that the BST’s submissions
were r elevant and necessary, the court has a discretion on the weight it would attach to the
report by Professor Harris and the court must be guided by the decision in Biowatch Trust
v Registrar Genetic Resources and Others3 on costs. It was accepted that the Regulator
acted in good faith and no costs would be appropriate in that instance.
Judgment
17. The parties presented comprehensive arguments, before both the Tribunal and this court.
The focus must be on whether the instruments offered deliver on the desired outcomes for
both the credit lender and the credit consumer as contemplated by the Act. The Act’s
purpose inter alia was to help draw into the economy most consumers who for decades
were excluded from full and fair participation in the economy of our country. An economy
which outpaced both the majority of the people of our country as well as th e majority of
our neighbours in our continent. That said, the state within the ethos of our constitutional
democracy, identified a need to “upgrade and align” our laws to the needs and demands
on the ground in particular, on the socio economic challenges o n the ground. In my view
the BST has been very much a part of that exercise of “bridging the gaps” for the very

3 Biowatch Trust v Registrar Genetic Resources and Others (CCT 80/08) [2009] ZACC 14; 2009 (6) SA 232 (CC)
; 2009 (10) BCLR 1014 (CC) (3 June 2009)


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marginalised people of our society. We noted that there was no objection to its
participation in these proceedings only to its adducing of evidence.

18. It is common cause that the central point in the arguments is the provisions of section
106(2) of the Act and the practical effect of the application of the section to the facts.

19. The section is couched in two separate and distinct parts and I am of the view that the
dispute can be resolved by analysis of facts to each of the parts. The consumer group
comprised a marginalised community of consumers, they relied on state grants for t heir
existence and must be understood within their context and position in our economy. JDG
offered the access to credit, obviously it must look for its sustainability and adopted an
accepted model of group cover. The cover was available at the point of s ale, the consumer
had already identified his or her need, identified where and how to purchase their goods
and concluded the agreements to take home their purchases , to my mind, it is unlikely that
he/she would have had the time to even consider the details of the contract in regard to a
“limited right to claim.”
20. It is noteworthy that JDG conceded before the Tribunal that the cover offered was designed
to meet the needs of the group, and that some in the group would likely not benefit to the
same extent as others. The question is whether at the point of sale, does the pensioner/
disabled person know this and regardless, agree to such an imbalance? It is an unfairness,
no matter that the price is at its lowest. I agree with Advocate Bhima, a claim will never
manifest, the consumer is already at the point of purchase disabled, what in the future
would lead him to believe that he may have a claim for disability cover and that he should
lodge a claim. Besides, to qualify, he will have to produce a letter from his employer about
his disability, he is disabled, unemployed, which employer does he look to? The provision
is unreasonable on the logic of the claims process in the agreement. The claimant in this


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instance is entitled to hold a reasonable expectation that he has cover and can claim in the
event of any loss. A disabled person who signs up for such cover, cannot hold such
expectation, and logically would not agree to pay for such cover.

21. Likewise, a pensioner who is now no longer employed, cannot hold an expectation, to
claim retrenchment cover, when he/she is in fact unemployed. The pensioner is in terms
of the claims process expected to produce a contract of employment and a letter from
his/her employer on the circumstances of his unemployment. This surely is unreasonable,
as he no longer works. If, as Mr Bhima for the BST contends , the claims will never
manifest, the Regulator will not be in a position to present evidence of a claimant who was
misled, confused, or misguided, to meet its evidentiary burden. It is noteworthy that the
Tribunal correctly identified that the credit grantor bears the burden to prove that the credit
insurance agreement is not unreasonable. The terms of the agr eement highlight the
unreasonableness of the agreement and therefor a violation of section 106(2)(a). On the
objective facts, the agreement violates the provisions of the Act.

22. When one has regard to the effect of the group cover which results in a cross subsidisation,
it is difficult to accept that a pensioner on a very small grant would knowingly agree to
pay for a service, that has no meaning to him, but a great deal of meanin g to a younger
consumer, whom he does not even know. I am cognisant of the accepted practice of a wide
cover, and usual in certain insurance products, however, in casu we are concerned with a
particular kind of consumer, and understanding this individual c onsumer becomes critical.

23. The Tribunal in its judgment appeared to have been satisfied that the agreement promotes
access to credit and is cheap, there being no comparative costs before it, it was unable to
compare “apples with apples”, but overlooks the net effect of such insurance on the rights


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and benefits to the unemployed and disabled compared to other members of the group for
the same price. See paragraphs, 23.16, 28 line 22, 29 lines 7 -10 and 30 of the Tribunal’s
judgment.

24. In my view, having regard to a pensioner’s claim, JDG will never bear a risk, that has no
potential to get off the ground in the first instance, the pensioner he would have no proof
of employment and logically no reasons for unemployment. In my view, JDG has a
secured source of revenue, in pensioners and disabled consumers, but carries no risk . The
revenue generated from this group simply pays out a claim which can comply with all its
requirements, that from the younger consumer. There can be no fairnes s and ultimately
reasonableness in this instance. There may be some truth in Mr Bhima’s submissions of
predatory practices, the cross subsidisation may assist in liquidating claims lodged by the
young consumer.

25. In reply Carstensen SC referred the court to the submission by JDG that the price is
“generally cheap”, some may not benefit, which must then support the Regulator’s case
for the order sought for a declaration and a referral to the Tribunal to determine an
appropriate penalty.

26. In my view there is no need for this court to even consider the price argument in terms of
section 106(2) (b), save to state that the risks to the disabled and unemployed consumer
exist, and there is no risk to JDG. The fact that no cheaper options are a vailable should
not be seen as an “invitation” to relax on the pensioner’s and disabled person ’s rights to
dignity and fair economic activity , the premiums are the same as all others in the group
they are entitled to the same benefits as all others in the group, the agreement to been seen
as fair and within the ethos of the Act.



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27. The Tribunal stated , “ on the face of it selling disability and retrenchment insurance to
consumers who are unemployed certainly appears to be unreasonable.” The Tribunal
accepted the credit provider’s case JDG, when, it did not deny that the credit insurance
was required; it did not deny that is sold insurance to the consumers; at the cost set out in
the agreement; it did not deny that the insurance had no meaning for those consumers, and
that they were unab le to claim for benefits. The consumer had no cho ice to exclude the
retrenchment and disability covers, the fact they would not have sourced such cover
elsewhere for less makes it reasonable, surely this cannot be the intention of the lawmaker.

28. To find differently, would mean that the court expects that a pensioner, must do the
impossible, find a contract of employment and an employer who provides a reason for his
unemployment, he/she must accept less for his/her money, and his/he consumer right s
carry less weight than those young consumers in the groups. I find that JDG has
contravened s ection 106(2)(a) of the Act, the agreement is unreasonable, it treats
pensioners, and disabled persons, unfairly and disproportionately, it’s an insurance cover
that goes beyond common sense, in the circumstances of the pensioner and the disabled
consumer. Although no comparative price or other option was before the Tribunal and this
court, I am of the view it is not fatal to the Regulator’s case, objectively view ed, the risks
to each of the parties is sufficient to demonstrate the unfairness and discriminatory
practises that the Act seeks to eradicate. The relief sought is therefor granted.
Costs
29. The parties agreed that based on the nature of the dispute and the duty of the Regulator
and the amicus, each party is to pay its own costs , which is appropriate in the
circumstances.



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Appearances:
For appellant: Adv PL Carstensen SC
Instructed by: Ramushu Mashile Twala, Johannesburg

For Respondent: Adv C Loxton SC, with him
Adv A Milovanovic -Bitter and
Adv. M Zikalala
Instructed by: Werksmans, Johannesburg

On behalf of amicus: Advocate J Bhima
Instructed by: Centre for Applied Legal Studies, Wits