It seems as though Allied Capital came up with (what seemed like) a clever scheme to avoid the National Credit Act. Essentially the idea was that a consumer would pawn their car to Allied Capital who would then lease that same car back to them. As a lease is not a credit agreement (and so it is not governed by the National Credit Act), that part of the agreement should not have been a credit agreement. However a pawn agreement IS governed by the National Credit Act (section 8(4)) so the agreement was a bit of a mix between the two.
Essentially the National Credit Regulator asked the National Consumer Tribunal to declare that the agreement was in fact a credit agreement (which they did). Allied was then ordered to audit all its transactions and refund any excess fees it had charged as well as return any vehicles it had repossessed.
What makes this ruling interesting is that the NCT was looking at the nature of the transaction (is this a credit agreement?) in light of all the facts and came to the conclusion that it was. The point here is that even if one (or even both) the parties think that the agreement is not governed by the National Credit Act, that does not stop the NCA from applying anyway.
Something to think about when you are coming up with clever schemes…

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