As World Consumer Rights Month is observed in March, the National Financial Ombud Scheme is encouraging South Africans to learn about their legal rights and the support available when facing financial hardship.
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The National Financial Ombud Scheme South Africa (NFO) is urging consumers to act early when facing financial difficulty rather than waiting until debt spirals out of control.
According to NFO Lead Ombud Nerosha Maseti, consumers have the right to cancel certain sales or seek assistance before debts escalate, potentially avoiding serious consequences such as repossession of vehicles or foreclosure on homes.
“Consumers have the right to cancel a sale before debts pile up, cutting off financial disaster before it begins. Acting now can protect you from the crushing consequences of repossession or foreclosure,” says Nerosha Maseti, Lead Ombud at the Banking and Credit Division of the NFO.
In 2025, the NFO’s Banking and Credit Divisions collectively handled 10 180 formal complaints across all financial products. Of these, 1 384 complaints related specifically to secured lending products such as vehicle finance and mortgage bonds, Maseti said.
“Disputes involving the repossession of vehicles and the foreclosure on houses are not merely financial disagreements; they are instances where the creditors legal rights intersect with the consumer’s human dignity, stability and in some instances, survival.
“When a consumer’s vehicle or house is at stake, the consequences reach far beyond money. They strike at the very core of one’s livelihood and family security.
“Consumers should not wait until legal processes start before seeking help. There are structured legal options that can reduce costs and limit long term financial damage. Acting early almost always leads to better outcomes than waiting for repossession,” she said.
As South Africa observes World Consumer Rights this month, the NFO urges consumers to familiarise themselves with the lawful options available to them in instances where they find themselves in dire financial difficulty. Consumer rights are rooted in our constitution and enforced through specific consumer protection laws.
There are structured legal mechanisms that allow consumers to exit or manage credit agreements responsibly, including voluntary termination under section 127 of the National Credit Act 34 of 2005, Sell Assist or Help U Sell programmes for mortgage holders, and private sale options where these are appropriate and properly structured.
Section 127 allows a consumer to terminate certain credit agreements at any time by giving written notice and returning the goods. This right exists even if the consumer is not yet in default.
This option generally applies to instalment sale agreements such as vehicles, furniture and appliances, secured loans, and lease agreements where the credit provider retains ownership of the goods. Section 127 does not apply to mortgage loans, unsecured loans, credit cards or overdraft facilities.
Once the goods are returned, the credit provider must have them valuated and communicate the estimated value to the consumer. The goods must then be sold at auction. If a shortfall remains, the consumer remains liable for that amount. If there is a surplus, it must be refunded to the consumer.
A properly exercised voluntary termination can help a consumer avoid court proceedings and legal costs, repossession fees, additional interest and enforcement charges, as well as the risk of a forced auction that may realise a lower price.
Maseti cautions that voluntary termination must be genuinely voluntary. Consumers cannot be forced, pressured or misled into surrendering their goods. Any intimidation, coercion or misrepresentation is a violation of consumer rights and should be reported.
A private sale occurs when a consumer finds their own buyer for an asset, such as a vehicle or house, and uses the proceeds to settle the outstanding credit balance, with the credit provider’s written consent. The agreed settlement amount must be paid, and any liens or bonds must be cleared prior to transfer.
For vehicles and other movable assets under instalment sale agreements, a private sale may achieve a higher price than an auction, thus reducing the extent of any shortfall. However, the consumer must secure a willing buyer, interest continues to accrue until settlement, and the credit provider must formally approve the settlement amount.
For mortgage properties, a private sale often offers a better chance of achieving a market related value compared to a forced sale in execution. It allows the homeowner to remain involved in the process and may create space to negotiate structured payment arrangements for any shortfall.
Private sales can be beneficial, but only if the credit provider’s security interests are properly addressed. If not, the validity of the transaction may be placed in question.
Although section 127 does not apply to mortgage agreements, many financial institutions offer structured solutions such as Sell Assist or Help U Sell programmes. These programmes are often preferable to a forced sale in execution.
Typically, they include a professional valuation, broad marketing through established property platforms, support until transfer is registered, and structured repayment options where a shortfall arises.
Once a matter escalates to a section 129 notice, summons or repossession proceedings, a consumer’s options narrow considerably and costs increase rapidly.
Consumers should also understand that repossession requires a court order and may only be carried out by a sheriff of the court. Debt collectors may not force entry or compel the surrender of goods. Consumers are entitled to refuse unlawful actions and to report misconduct to the credit provider and, if necessary, to the NFO.
Tips for World Consumer Rights Month:
During Consumer Rights Month, Maseti encourages consumers to:
To contact the NFO call 0860-800-900, Whatsapp +27 (0) 66 473 0157 or email info@nfosa.co.za