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MOVE TO REPOSSESS 96 CARS IN 1 DAY

25/08/2020 05:35:00 BY STANLEY KHUMALO

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MANZINI – In just one day, a large number of import car dealerships sought to repossess 96 vehicles.

This was according to records at the Manzini Magistrates Court yesterday, which were applications for default payment.

In the applications, the different legal representatives filed their desire to have the cases heard on behalf of their clients, who want the cars repossessed.

This happened on the day this publication reported that some import car dealerships, which have contributed to the hike of vehicles in the kingdom’s road network, are ripping off the citizenry seeking to own vehicles under the guise of offering a credit facility.

The credit facility allows an aspirant motorist to purchase a vehicle on credit after, in most instances, paying a 70 per cent deposit for the vehicle they seek to own.

Balance

Thereafter, the consumers are expected to settle the balance within a period of six months. Failure to adhere to the contract signed by the consumer with the dealership, results in the vehicle being repossessed while also the buyer loses the deposit paid for the automobile.

Such an arrangement has been declared illegal by the Financial Services Regulatory Authority (FSRA) in that the dealerships do not have licences to advance anything on credit to consumers.

Also, lawyers stated that the necessary procedures were not being followed when these cars were being repossessed.

Yesterday, from the register at the Manzini Magistrates Court, it was discovered that from the cases that were listed there, 96 of them were for import car dealerships which were seeking to have their vehicles recaptured as the buyers had breached contracts.

This is despite the fact that currently, there is no dealership in the database of the FSRA that is authorised to offer credit to the citizenry.

This was disclosed by the Chief Executive Officer of FSRA, Ncamiso Ntshalintshali. The CEO highlighted that the numbers that were to be repossessed depicted the extent of the challenge in the issuance of credit by the dealerships.

He said: “It’s quite concerning and does put into perspective the plight of the consumer. We haven’t issued credit provision licences to car dealerships.”

Licence

The import car dealerships are expected to have a licence from the FSRA to offer credit as per the dictates of the Consumer Credit Act of 2016, which Ntshalintshali’s entity is the custodian of.

Section 5 of the Consumer Credit Act addresses the ‘Prohibition against credit provision business without a licence’.

This section states: “A person shall not provide, or otherwise carry on as being authorised to credit or pawn broking unless that person – (a) is the holder of a credit provider licence; and (b) carries out the credit provision or pawn broking activities in accordance with this Act.

“A person who contravenes this section commits an offence and shall, on conviction, be liable to a fine not exceeding E20 000 or to imprisonment for a term not exceeding five years or both.

“Notwithstanding Subsection (1), a person may provide credit as a once-off credit provider or in an incidental credit agreement.”

Ntshalintshali said the challenge with the credit offered to individuals by the import car dealerships was that the deals were made and committed to in private.

He said they were only exposed when there was something that had not gone right thereafter. He said in terms of the Consumer Credit Act, the import car dealerships were supposed to have a license from FSRA.

Furthermore, he explained that it was in the process of applying for the licence to offer credit to consumers, that the authority would determine what type of licence was to be extended to the import car dealerships.

“Those seeking to buy on credit from these import car dealerships, should look for the licence because it would protect them.”

Ntshalintshali said the application of the licence by the import car dealerships was meant to be guided by the terms they were offering on the credit, such that the FSRA would advise on how much was needed as deposit and the terms on which the balance was to be paid.

Meanwhile, Abudalid Bukhari from Cars from Japan said they did not seek the licence because they were not charging any interest.

He said consumers were made to only pay the value of the vehicle and if any additional charges were incurred, they were paid outside the initial contract. For example, he said, if the vehicle was repossessed, the lawyer fees were paid to the attorney and not the dealership. On the other hand, a legal practitioner said the practice to offer credit was to the detriment of the consumer as many were left far worse off than they were when they purchased the vehicle. In fact, he said some of the import car dealerships sought the order to repossess the vehicle without even alerting the client that legal action was being taken against him or her.

Repossessed

Ordinarily, he said, before the vehicle was repossessed, the import car dealerships should write to their client and state that he/she should settle the balance within 14 days, failing which legal action would be taken. If then, he said, the client did not comply with the communication, the car dealerships could seek an order of the court that would compel the client to pay. “If the client does not comply with the order of the court, then the dealership can seek the repossession of the car. However, after auctioning or selling the car (at its value of repossession), the dealership should, after deducting all costs, pay the difference to the customer.”