Earlier this year Numsa News (No.1 March 2013) reported on the Department of trade and industry’s (DTI) intention to introduce a second credit amnesty for those who have incurred bad debt of amounts not exceeding R10, 000.
After briefing the select committee on trade and international relations on 14 February 2013, the department returned to parliament in August to brief the portfolio committee on trade and industry on some of the latest developments on a study commissioned by the National Credit Regulator (NCR) on the ‘amnesty project’.
In its presentation the DTI argued that access to a ‘credit market’ was necessary to stimulate economic growth and that credit impairment limited consumer spending and slowed down the wider economy from achieving its developmental goals.
The portfolio committee was asked to consider a number of possible options together with the associated risks that these options would have on credit providers.
The option favoured by the Select Committee called for:
• Removal of all adverse information listings irrespective of value and irrespective of non-payment;
• Removal of all paid up adverse information listings on an ongoing basis;
• Removal of all paid up judgments on an ongoing basis
The DTI presented a list of recommendations to the portfolio committee for trade and industry for adoption:
• to proceed with a responsible amnesty by removing some credit information;
• paid up judgments and adverse information listings should be removed on an ongoing basis following payment of the underlying debt as is done in Brazil;
• Credit providers should be required to conduct more comprehensive affordability assessments;
• Credit providers should be required to use discretionary income guidelines
• Credit providers should be required to prove that consumers have the discretionary income they claim;
• the NCR should continue to audit credit providers’ affordability assessments on an ongoing basis;
• the NCR should prosecute all cases of reckless lending;
• listing rules are required to ensure consumers are properly notified and given sufficient time to remedy default;
• credit literacy programs should include NCR materials both in credit retail outlets and elsewhere throughout the credit lifecycle;
• abuses such as collecting prescribed debt, inappropriate EAO’s/garnishee orders and exorbitant credit life insurance should be prevented.
[Source: DTI, 2013]
While DTI is of the view that the minister should be empowered to issue regulations to give effect to the ‘credit amnesty’, the department says that the amnesty can be implemented once the necessary legislative amendments and timelines have been confirmed.