Interest and the NCA
Are you running the risk of being fined for the incorrect interest calculation applied by your software?
With the implementation of the National Credit Act in 2006, came a different manner of calculating interest on outstanding balances of debtors.
Gone were the days where one could simply calculate interest at the applicable rate from date of one payment to the next; as the National Credit Acts Regulations provide for 8 separate components relating to the calculation of interest on outstanding balances, the last of which provides that credit providers calculations of interest may not differ from the prescribed method by more than 0.1%.
The calculation prescribed by the National Credit Act has become slightly more complex with far-reaching effects on software vendors; many of whom are unable to accurately deal with the precise calculations and the volumes of transactions required complying with the Act correctly.
However, the risk of incorrectly calculating interest on an outstanding account is that of the lawyer, debt collector or credit provider involved … not the software vendor; which raises a very pertinent question:
Will you be fined for the inaccurate calculation of interest simply because your software vendor did not have an in-depth understanding of what was required?
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