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A right to set-off ousted in all credit agreements regulated by the National Credit Act

This article will critically analyse the decision in National Credit Regulator vs. Standard Bank of South Africa Limited in view of the application and interpretation of the principle emanating from audi alteram partem rule. Reference will be made to the common-law principle of set off. The common law practice of set off other than in terms of the National Credit Act fundamentally threatens the socio-economic rights and/or livelihood and dignity of the low-income earners, a distinctly vulnerable group in society. While it is true that the main objective of the National Credit Act is to protect consumers, the interests of creditors must also be safeguarded and should not be overlooked. The South Gauteng High Court granted a declaratory order to the effect that in light of section 90(2)(n) and section 124 of the National Credit Act, 34 of 2005, the common law right of set-off is not applicable in respect of credit agreements which are subject to the National Credit Act. In terms of the principle of audi alteram partem rule, the affected person must be afforded a reasonable chance or opportunity to answer to the charges or allegations against him/her and put forward his/her case. In other words, a party who is affected by the outcomes of the administrative decision should be heard or afforded an opportunity to state his/her version before the decision is taken, particularly an adverse decision is taken against him/her. The banks normally applied the set-off common law principle to the consumers without affording the consumers an opportunity to arrange and agree on the terms of payments to settle the debt