Clearing your credit profile is now simpler

Whilst the Regulations do not provide for a rescission of judgment (something that would not have been possible as only a Court can do so) the end result will be that a paid up judgment, even if it has not been rescinded at Court, will no longer adversely affect the consumer with regards to obtaining credit in future

By: Mzo Tshaka

On 25 February 2014 the Minister of Trade and Industry, Dr Rob Davies, published the Regulations relating to the removal of adverse consumer information from the credit bureau.

While it remains to be seen what impact, if any, these Regulations will have in the credit market, from a consumer’s point of view, the Regulations must surely be welcome as they will make the process of clearing one’s name simpler and less costly.

Whilst the Regulations do not provide for a rescission of judgment (something that would not have been possible as only a Court can do so) the end result will be that a paid up judgment, even if it has not been rescinded at Court, will no longer adversely affect the consumer with regards to obtaining credit in future.

The current practice with regards to defaults is even more concerning where the consumer would have his/her name listed on the credit bureau for two years before his/her name can be removed – currently this applies whether the debt has been paid or not. The change in the status from, perhaps “handed over” to “paid up” was always cold comfort for a consumer who could still not obtain credit on the basis of that adverse listing.

From a credit provider’s point of view, the Regulations will have far more bigger impact. The relative ease with which the credit providers could establish a consumer’s creditworthiness (by simply obtaining information from the credit bureau) will now become more complicated. It is worth pointing out that in terms of the NCA the credit providers will still have to ensure that they do not extend credit to consumers recklessly. It is clear that the application forms and the questions asked from a consumer may need to be amended to take into account the provisions contained in the Regulations.

Furthermore, the fact that in terms of the Regulations the credit providers are now required to issue “paid up letters” as soon as the “capital amount” has been paid by the consumer will have an impact on the credit provider’s ability to recover the additional amount, like interest and legal costs incurred in the enforcement process.

Only time will tell whether the Regulations will have their intended results or if they will simply make it easier for consumers to be even more indebted.

Mzo Tshaka is the director of Schoeman Tshaka Attorneys.

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