the dti TO HOST CONFERENCE ON THE AMENDMENTS TO THE NATIONAL CREDIT ACT TO PREVENT OVER-INDEBTEDNESS

the dti TO HOST  CONFERENCE ON THE AMENDMENTS TO THE NATIONAL CREDIT ACT TO PREVENT OVER-INDEBTEDNESS

The Department of Trade and Industry (the dti) and the National Credit Regulator (NCR) will host a conference on the new National Credit Amendment Act under the theme: ‘’Strategies to Reduce Over-Indebtedness in South Africa’’. The conference takes place at Birchwood Hotel, Boksburg on 19 March 2015.

Government is concerned about the high level of over-indebtedness which results from failure to do proper affordability tests on consumers, hidden costs of credit, as well as continued unfair lending practices by some credit providers. In addressing these challenges, the National Credit Act was amended last year and signed into law by President Jacob Zuma. Regulations have been finalised and the National Credit Amendment Act will come into effect soon.  

While the conference will touch on the main features of the amendments, it will also focus on strategies to combat over-indebtedness and how to assist persons that are under debt trap. The amendments improve the debt counselling and review process, as well as provide for early rehabilitation of consumers who had been through debt counselling.

The conference targets all stakeholders that are impacted by the amendments, such as banks, other credit providers, debt counsellors, credit bureaus, consumer groups and associations, individual consumers, and lawyers in order to ensure a common understanding on this legislation.

The amendments strengthen affordability tests through new regulations, and will provide a standard and consistent approach to providing credit by credit providers. It also requires open and honest disclosure by consumers when applying for credit so that they don’t find themselves over-extended.

The amendments also enhance coordination among regulators so that they can enforce the legislation more effectively. But more, regulators are encouraged to coordinate their activities for better impact. Worth noting is that the amendments empower the National Consumer Tribunal (NCT) to hear breaches relating to reckless lending and impose appropriate penalties.  Amendments also provide for automatic removal of adverse credit information once payment of the judgment is made.  Also emphasised is the requirement for credit providers to disclose the total cost of credit and capping of credit insurance.  In addition, the sale and collection of prescribed debt is prohibited.

The conference will also talk to the rising concerns regarding the abuse of emolument attachment orders (EAO), which hold many consumers hostage as they find themselves trapped in debt situations that seem impossible to escape. 

This conference marks the beginning of the implementation plan to raise awareness on the new amendments, and the National Credit Regulator will continue with education and awareness initiatives and strengthened enforcement strategies.