Standards

What these are for

Most private-lending disputes do not start with a complicated structure. They start with a conversation in which something was not said: who the money would actually go to, what the commission was, what happens if the borrower stops paying, whether the capital can be recovered early. Each standard below exists because its absence is a recurring cause of harm.

They are written so that a reader can test them without expertise. If you cannot tell from an organisation’s own material which entity would hold your capital, it has failed the first one, and you have learned something useful in thirty seconds.

Standards for organisations

Say what you are

An organisation states its legal name, registration number and its exact role in a transaction — platform, credit provider, administrator, issuer or adviser. A reader should never have to work out who would actually hold their money.

Show the registration

Where a role requires a registration, the number is published where a prospective client will see it, not supplied on request. Registration is public, and an organisation that treats its own number as private has answered a different question.

Describe the risk as prominently as the return

Any material that quotes a rate also states what the capital is exposed to, what happens if a borrower does not pay, and on what the return of capital depends. Risk is not a page in the back of a document.

Never describe a return as guaranteed

A fixed rate is a price, not a promise that capital comes back. The words guaranteed, risk-free, secure and capital-protected are not used about private lending, in any material, at any time.

Disclose what you are paid

Fees, commissions and who pays them are disclosed on request in writing, and the existence of a commission is disclosed before an introduction, not after it.

Put it in writing

A prospective lender may keep the agreement, the risk disclosure and the answers they were given. An organisation that shows documents but will not release them fails this standard.

Verify identity where it applies

Where the organisation is an accountable institution, risk-based customer due diligence under FICA is applied, and the client is told what is being asked for and why. An unexplained absence of identity checks where they should apply is a warning sign.

Provide a complaints route a person can use

A named channel, an acknowledgement, and a record of the outcome. Not an unmonitored inbox.

Standards for practitioners

Stay inside the role

A practitioner explains an arrangement and introduces a provider. A title, Association membership or directory listing does not authorise the provision of regulated financial advice or intermediary services; where a recommendation or a regulated service is given, the practitioner says under which authorised financial services provider and mandate they act.

Ask before quoting

Circumstances first, numbers second. A practitioner who leads with a rate has skipped the only part of the conversation that determines suitability.

Explain what can go wrong, unprompted

Illiquidity, credit risk, what happens on default and what the return of capital depends on — raised by the practitioner, not extracted by the reader.

Disclose the commission

Before the introduction, in plain terms.

Never rush a decision

No closing dates, no limited allocations, no rate that expires this week. Urgency is a sales device, and in this market it is a warning sign.

Keep records

What was shown, what was said and what was sent, so that a disputed conversation can be reconstructed.

Cooperate with a complaint

Respond to the organisation that contracts you, and to the Association where a listing is in question.

How the standards are applied

Through verification. The verification methodology sets out what is checked against these standards, what evidence is required, what each status means and how records are reviewed or withdrawn. One organisation has completed them: the Founding Gold Partner’s record publishes the assessment scope, the evidence reviewed, the connection between that organisation and the Association’s founding members, the checks that do not apply to its role, and the items still open. Every record is written to be weighed rather than taken on trust.

Conduct expectations that apply continuously, rather than at the point of a check, are in the code of conduct. What happens when a standard is breached is in complaints and review.

How these will change

Standards written by one organisation for a market it participates in are worth less than standards developed with the market and reviewed by people who do not depend on it. The governance page sets out what has to exist before that can be claimed, and what the Association is not claiming in the meantime. Comments on any standard on this page are welcome at info@privatelendingassociation.co.za and are read.

Common questions

Are these standards legally binding?

No. The Association is not a regulator and has no statutory powers. These standards are published expectations: an organisation or practitioner that wants to be listed agrees to them, and a listing can be withdrawn where they are not met. Legal obligations come from the National Credit Act, FAIS, FICA and the other law referenced throughout this site, and they apply whether or not anyone is listed here.

What happens if a listed organisation breaches a standard?

It is dealt with under the complaints and review process: the Association can record the matter, ask for an explanation, correct what it publishes, and change or withdraw a listing. It cannot fine anyone, order redress or compel anything. Where a matter is a regulatory one, the complaints page names the body that can act.