JOHANNESBURG – The Gauteng High Court in Johannesburg has ruled that it is unreasonable and exploitative to offer insurance cover for disability and retrenchment to already disabled or unemployed social grant beneficiaries, marking a significant legal victory for consumer protection and the rights of vulnerable borrowers.
The case centered on an insurance product bundled into loan agreements by JDG Trading, a major credit provider offering loans for household goods and furniture to social grant recipients. As part of its loan terms, JDG Trading required customers to take out insurance — either through its own offering or another provider — which included cover for disability and retrenchment, even though many of its clients were already disabled or unemployed and thus ineligible to claim.
Initially, the National Credit Tribunal had sided with JDG Trading, but this decision was overturned in May 2025 after the National Credit Regulator (NCR) escalated the case to the High Court.
Judges Shaida Mohamed and Khashane Manamela found the product unreasonable, agreeing with arguments presented by the NCR and civil society group Black Sash, which joined the case as a friend of the court.
“The consumers in this case belonged to a marginalised group who are dependent on social grants for their existence,” the judges wrote. “JDG Trading conceded that this class of consumers could never make use of the policy.”
The court determined that the insurance product essentially forced vulnerable individuals to cross-subsidise more advantaged customers who could actually benefit from the cover.
The court also found that the policy infringed on constitutional rights, particularly the right of access to social security and social assistance, as outlined in Section 27 of South Africa’s Constitution.
“By placing an unfair burden on a vulnerable segment of society,” the court ruled, “the insurance product was at odds with the objectives of the National Credit Act,” which is meant to make credit more accessible while guarding against inequitable and discriminatory practices.
Black Sash, represented by the Centre for Applied Legal Studies, provided expert actuarial evidence showing that the product offered no real benefit to the social grant beneficiaries it targeted.
JDG Trading had defended its policy by arguing that:
Customers were not forced to choose their bundled insurance;
The policy was affordable and convenient;
No consumer had provided evidence of being misled.
But the court rejected this reasoning, stating that vulnerable consumers at the point of sale were unlikely to fully understand or evaluate the policy’s terms, especially without being offered alternative coverage options. There was no option to exclude retrenchment or disability cover from the bundled insurance product.
“Pensioners would not knowingly sign up for a disadvantageous policy,” the judges said, underscoring the power imbalance between borrowers and credit providers.
The court upheld the NCR’s appeal, ruling the product unreasonable and non-compliant with consumer protection law. However, no cost order was made, meaning each party will pay its own legal expenses.
This judgment sets an important precedent for ensuring transparency, fairness, and accountability in credit markets, particularly in products marketed to low-income and vulnerable consumers.
It also sends a strong message to credit providers that bundled insurance must be tailored to the real needs and eligibility of their customers, not structured in a way that exploits or misleads them.
