Consumer watchdog withdraws case against Foschini subsidiary
In 2017 the National Credit Regulator accused Foschini Retail Group of contravening the National Credit Act
In an unexpected turn of events, the National Credit Regulator (NCR) has withdrawn its referral of Foschini Retail Group (FRG), a subsidiary of listed clothing retailer The Foschini Group (TFG), to the National Consumer Tribunal for an alleged breach of the National Credit Act (NCA).
The move, announced by TFG on the stock exchange news service Sens, could bring to an end the stand-off between the company and the consumer watchdog which dates back to July 2017.
Foschini Retail Group sells Club magazine subscriptions to consumers, which the regulator said amounted to “charging” a “fee” that is not permitted by the Act.
The regulator said the Club fee charged by Foschini was reflected in consumers’ credit agreements.
“The NCA allows consumers to be given a quotation that sets out the cost of credit before signing credit agreements. Consumers should request this quotation from their credit providers so they can properly check the cost of credit being offered,” Jacqueline Peters, a manager for investigations and enforcement at the NCR, said when the body referred the matter to the tribunal.
But in a new twist, the regulator appears to have made an about-turn this week. “FRG received notification from the NCR on May 29 2019 confirming that the NCR has withdrawn its referral to the [tribunal] regarding the Club matter,” TFG said.
The regulator wanted the tribunal to order Foschini to refund the affected consumers the Club fees charged and conduct an independent audit into its loan book to determine the number of customers to be refunded. It also wanted to interdict Foschini from charging consumers a Club fee on credit agreements and to impose an administrative fine.
The company has maintained its innocence, saying it will oppose the allegations as it deems them to be irrational and based on an incorrect interpretation of the legislation.
TFG said the law did not limit which products retailers could sell to customers on their credit accounts.
“TFG’s Club products are optional magazine subscriptions with insurance and other benefits that can be subscribed to at application stage, or later via telemarketing and other marketing channels,” the company said at the time.
The regulator could not be reached for comment on Thursday.