Press Release: Rising financial stress is behind the sharp increase in illegal lending in South Africa

PRESS RELEASE

FOR IMMEDIATE RELEASE

Rising financial stress is behind the sharp increase in illegal lending in South Africa

(Pretoria, South Africa, 08 April 2026) The Credit Association of South Africa (CASA) has signalled deep concern about the growing rise in illegal lending, warning that increasing financial pressure on consumers and tightening access to formal credit are driving more South Africans into the unregulated credit market.

This warning follows the release of the latest Q4 2025 Credit Stress Report, which highlights a sharp deterioration in consumer financial health.

According to the report:

·        Over 40% of credit-active consumers are in default

·        Total overdue balances have increased significantly, and

·        A growing number of consumers are struggling to meet their financial obligations.

At the same time, industry data shows that a significant portion of credit applications are being declined, as affordability pressures intensify.

A growing shift toward informal lending

CASA CEO, Leonie van Pletzen, says these trends are creating a dangerous shift in the credit landscape.

“Consumers do not stop needing credit when they are declined, they simply look elsewhere. What we are seeing now is a growing migration from the regulated credit market into illegal and informal lending.”

Illegal lenders, often operating outside of any regulatory framework, typically:

·        Do not conduct affordability assessments,

·        Charge excessive and unregulated interest rates, and

·        Employ harmful or coercive collection practices.

“This creates a parallel credit system that operates completely outside consumer protection mechanisms,” van Pletzen adds.

Credit increasingly used for essential needs

The data further shows that many South Africans are increasingly using credit to cover essential living expenses such as food, transport, and utilities, rather than discretionary spending.

“Credit is no longer a convenience, it has in fact become a necessity for many households,” warns van Pletzen. “Unfortunately, when consumers are excluded from formal credit, they are not protected, they are exposed.”

The risk of over-regulation

Van Pletzen cautions that well-intentioned regulatory constraints, including outdated pricing structures and increasing compliance costs, may unintentionally contribute to financial exclusion.

“Exclusion does not equal protection,” she explains. “If regulated credit becomes unsustainable or inaccessible, illegal lending becomes inevitable.”

CASA emphasises the need for a balanced regulatory framework that:

               •             Ensures strong consumer protection,

               •             Maintains access to responsible, regulated credit, and

               •             Prevents the expansion of illegal lending markets.

A call for urgent action

CASA is calling for urgent collaboration between regulators, policymakers, and industry stakeholders to address the growing risk.

Key focus areas include:

               •             Updating regulatory frameworks to reflect current economic realities,

               •             Strengthening enforcement against illegal lending practices, and

               •             Promoting financial inclusion through sustainable, compliant credit provision.

Protecting Consumers Through Access

“As an industry, we must ensure that consumers have access to safe, regulated credit,” concludes van Pletzen. “Because when the formal system fails to meet demand, the informal system steps in, and that is where the real risk lies.”

Ends/

About the Credit Association of South Africa (CASA)

CASA is South Africa’s leading association representing responsible and professional non-bank credit providers. CASA exists to enable credit providers to thrive and to build a sustainable credit industry that supports economic growth and financial inclusion across South Africa.

CASA brings together ethical and professional credit providers to build a fair, sustainable, and inclusive credit industry, reflecting a broader mandate and renewed purpose to serve the entire credit sector.

It is a member-based, non-profit association governed by an Annual General Meeting, an elected Board, and specialised Board Committees. CASA is registered as a Section 21 Company (1996/001116/08), with MVB Auditors as its auditors and Nedbank as its official banking partner.

About Leonie van Pletzen

Leonie van Pletzen is the Chief Executive Officer of the Credit Association of South Africa (CASA). With 15 years of experience in the industry, Leonie is recognised as a passionate advocate for ethical lending, financial inclusion, and regulatory reform. She brings a wealth of expertise in industry advocacy, corporate governance, stakeholder engagement, and sustainable development.

Leonie has played a key role in shaping policy dialogue between government, regulators, and the private sector, and is an active contributor on various national committees, including the National Credit Regulator’s Credit Industry Forum and the Banking Sector Education and Training Authority. Her leadership is defined by a commitment to protecting vulnerable consumers while ensuring the long-term sustainability of responsible credit provision in South Africa.

For interviews or further information please contact:

Claire Watt

The Friday Street Club

Tel: 082 490 3796

Email: claire@thefridaystreetclub.co.za