A new ‘credit information amnesty’ is set kick in on the 1st of April 2014. This has been touted as a brave development heralding a new credit space. What does it mean to you, the consumer?
Starting on a clean slate
The amnesty means that you are starting on a clean slate with regards to information held by credit bureaus under your name. Black listing relating to paid up debt will be cleaned.
The status of your existing debt
You are still required to pay all your active debt. This is not a ‘credit amnesty’. It is a ‘credit information amnesty’.
What is a credit information amnesty?
The character of this amnesty is accurately captured in the official name of the relevant regulations passed last month. They are called: “The removal of adverse consumer credit information and information relating to paid up judgment regulations.”
Read the latter title of the regulations again and you will get the idea.
The amnesty relates to information held under your name by credit bureaus. When you take debt, the debt provider forwards your credit repayment behaviour to the credit bureaus.
This information is kept by the bureaus to enable credit providers to assess the risk they are taking in you when considering your future credit application.
According to the National Credit Regulator, there are 13 registered credit bureaus in South Africa. All are bound by the new regulations.
From the 1st of April 2014, all credit bureaus will be required to remove all historical adverse information about consumers. This must happen within two months; April to May.
Explaining this further the minister of trade industry Rob Davies said: “Therefore effective from 1 April 2014 credit bureaus are prohibited from displaying or providing information that ought to be removed in terms of this Notice to anyone.”
The credit bureaus must within thirty (30) days after May 2014 submit a report by an independent auditor confirming that all such information has been removed.”
“This Notice is applicable automatically to all affected consumers, unlike the 2007 amnesty whereby a consumer was required to follow a particular process to benefit from the amnesty. This means a consumer who may not even be aware of this Notice will nevertheless benefit.”
This was our first installment on the Credit Information Amnesty. See our second installment which explains the difference between adverse consumer credit information and information relating to paid up judgment.