Credit Provider versus Consumer - Service Provider versus Consumer

Recently I had a client who could not comprehend the meaning of the legal terminology in terms of who and what precisely a Consumer constitutes.


First of all it does not matter whether you find yourself within the ambit of the National Credit Act or the Consumer Protection Bill.  The Consumer will always be your own client you are doing business with. 


My client understood Consumer as the entity at the end of the Service line; For example X sells to a Distributor and he again sells to the man on the street, my client would argue that the man on the street is the Consumer and nobody else in that specific line of business.  Legalistically that is wrong.  This how-ever is a terminology used by economists within their specific environments.


In the example above the Distributor will be a Consumer in the capacity as the client of X, and the man on the street will also be a Consumer in the capacity as the client of the Distributor.  Thus your own clients are Consumers and you are either the Credit Provider or the Service Provider.  You again will also be the Consumer when you buy from somebody else and that is how the position differs under different situations.


Let me explain in terms of the NCA what precisely Credit Providers and Consumers are:


The NCA defines a “Credit Provider” as follows:

• The party who supplies goods or services under a discount transaction, incidental credit agreement or   installment agreement;

• The party who advances money or credit under a pawn transaction;

• The party who extends credit under a credit facility;

• The mortgagee under a mortgage agreement;

• The lender under a secured loan;

• The lessor under a lease;

• The party to whom a assurance or promise is made under a credit guarantee;

• The party who advances money or credit to another under any other credit agreement;

• Any other person who acquires the rights of a credit provider under a credit agreement after it has been entered into – for example by way of cession.

The NCA defines a “Consumer” as follows:

• The party to whom goods and services as sold under a discount transaction, incidental credit agreement, or installment agreement;

• The party to whom money is paid, or credit granted, under a pawn transaction;

• The party to whom credit is granted under a credit facility;

• The mortgagor under a mortgage agreement;

• The borrower under a secured loan;

• The lessee under a lease;

• The guarantor under a credit guarantee;

• The party to whom or under whose direction money is advanced or credit granted under any other credit agreement.

As can be seen the word “Consumer” is a “group word” for all entities (companies whether public or private, close corporations, partnerships, trust, associations, sole proprietors, trading as . . .), specifically in their capacities as consumers and not credit providers.






As can be seen the word “Credit Provider” is a “group word” for all entities (companies whether public or private, close corporations, partnerships, trust, associations, sole proprietors, trading as . . .), specifically in their capacities as credit providers and not consumers.


This however does not impact on liability in terms of the service provided to the Consumer from the highest level to the lowest level, but that is an debate for another day.