The National Credit Act (NCA) has to some extent failed to protect consumers in certain aspects of the credit granting and debt review process.
This view can be taken from the debt counselling industry which was reacting to the proposed amendments of the NCA. The proposed amendments were released by the minister of trade and industry Rob Davies last week.
Deborah Solomon founder of the Debt Counselling Industry Portal, theDCI.co.za, said the provisions of the Bill were “desperately needed good news” for consumers and the economy.
She said the provisions would go a long way to ensure the long-term sustainability of the credit industry and the economy, while prohibiting widespread abuse by criminalising certain contraventions of the new regulations.
“We applaud the minister and the government for taking a strong stand and for understanding the plight of consumers who have suffered the brunt of the many loopholes in National Credit Act over the past six years. Self-regulation by the banks and other credit providers has failed dismally and the minister has come to the rescue to forever change the landscape of this vital financial sector,” Solomon said.
“These radical changes will empower debt counsellors and consumers by breathing new life into the debt review process, which until now has been hampered by severe legal challenges.”
“We are absolutely delighted that the minister took our submissions on the bill as debt counsellors very seriously as he has implemented many of our recommendations in the final provisions.”
Solomon added the move to develop a statutory industry code and affordability assessment regulations were “huge steps” that would “sweep clean” the credit industry.
“These regulations will give the regulator and the courts more teeth when it comes to assessing cases of reckless lending and will leave no wriggle room for credit providers to blame debt stressed consumers for lying about their financial positions.”
Solomon added that the decision to cap the cost of credit life insurance and to include a provision that credit providers would no longer be able to terminate a credit agreement when a debt review application is before the court offered consumers “protection and predictability”.
“The provisions will ensure that the credit market works efficiently for consumers, the banks and the economy as a whole. The way the credit market had been operating was not sustainable given the high levels of household debt, consumers with impaired credit records and the continual granting of additional credit to the already over-indebted.”
Solomon said more good news for consumers was the ban on buying, selling and collecting of prescribed debts by third parties.
“South African consumers have been plagued for many years by companies that seek to profit from chasing consumers for payments of prescribed debts. Finally, these companies can now be brought to book, along with their bullying tactics.”