At the end of February this year the National Assembly unanimously adopted the National Credit Amendment Bill of 2013 (“the Bill”). The purpose of the Bill is to introduce or amend important changes in terms of the National Credit Act 34 of 2005 (“the Act”). Its objective is to ensure certainty and clarity where the Act seems to create uncertainty. It is also apparent that the Bill has come to the aid of the consumer when it comes to issues such as the proverbial “black listing”.
Clause 12 of the Bill introduces the registration of payment distribution agents. These agents are defined as persons who on behalf of a consumer that has applied for debt review in terms of the Act, distributes payments to credit providers in terms of a debt re-arrangement, court order, order of the National Consumer Tribunal or an agreement. However a consumer is not obliged to make use of the services of these agents.
Clause 15 has amended section 48 of the Act by empowering the Minister responsible for consumer credit matters by the recommendation of National Credit Regulator to prescribe criteria and measures to determine the outcome of affordability assessments. This is to ensure that there is a set standard that credit providers can follow when carrying out affordability assessments before granting a consumer credit.
Clause 21 amends section 71 of the Act by providing for the debt counsellor to issue a clearance certiﬁcate if the consumer has satisﬁed all the debt obligations under a debt rearrangement within seven days after the consumer has:
(a) satisﬁed all the obligations under every credit agreement that was subject to that debt re-arrangement order or agreement, in accordance with that order or agreement; or
(i) ﬁnancial ability to satisfy the future obligations in terms of the re-arrangement order or agreement under—
(aa) a mortgage agreement which secures a credit agreement for the purchase or improvement of immovable property; or
(bb) any other long term agreement as may be prescribed;
(ii) that there are no arrears on the re-arranged agreements contemplated in subparagraph (i); and
(iii) that all obligations under every credit agreement included in the re-arrangement order or agreement, other than those contemplated in subparagraph (i), have been settled in full.
Clause 22 of the Bill inserts a new section 71A in order to provide for automatic removal of consumer credit information:
1.The credit provider must submit to the credit bureau within seven days after settlement by a consumer of any obligation under any credit agreement, information regarding such settlement where an obligation under such credit agreement was the subject of:
a) an adverse classification of consumer behaviour;
b) an adverse classification enforcement action against a consumer; or
c) a payment profile listed in the consumer credit payment profile.
2.The credit bureau must remove any adverse listing contemplated in subsection 1 within seven days after receipt of such information from the credit provider.
3. If the credit provider fails to submit information regarding a settlement as contemplated in subsection 1, a consumer may lodge a complaint against such provider with the National Credit Regulator.
4.For purposes of this clause-
a)‘adverse classification of consumer behaviour’ means classification relating to consumer behaviour and includes a classification such as ‘delinquent’, ‘default’, ‘slow paying’, ‘absconded’, or ‘not contactable’; and
b)‘adverse classification of enforcement action’ means classification relating to enforcement action taken by the credit provider, including a classification such as ‘handed over for collection or recovery’, ‘legal action’ or write-off.
The Department of Trade and Industry published a notice in the Government Gazette that includes regulations to remove all adverse consumer credit information and information relating to paid up judgements (“the Regulations”). The regulation concerning the removal of adverse consumer information refers to the abovementioned clause. Information relating to paid up judgments refers to civil court judgement debts where the consumer has settled the capital amount under the judgement.
The Regulations comes into effect on 1 April 2014 and states that credit bureaus must remove all such information within two months from the effective date. Consumers have therefore been urged to pay all their debts by the end of March to guarantee that they will no longer be ‘blacklisted’.
Nevertheless credit providers will still have access to consumers’ credit reports/profiles but such access will be limited as all information causing one to be ‘blacklisted’ will be a thing of the past. Consumers who have been struggling to find employment or even take out a loan to buy a home because of their bad credit listing will now have the opportunity to do so. The Bill is expected to come into effect before the elections later this year.