A blight on the consumers of South Africa, reckless lending seems to be a never ending problem. Even with the laws and amendments to the National Credit Act, it seems many creditors still attempt to undermine both the act and their consumers. However, to finally curb this financial epidemic once and for all, legislative measures are being taken to give the National Credit Regulator more power as well as apply stricter conditions regarding providing loans and other forms of credit usage.

The Department of Trade and Industry hope to close the doors on reckless lending by bringing in new laws, including stricter constraints on the allowances of credit providers. By extending the powers of the National Credit Regulator to allow for proactive investigations and the ability to impose administrative fines on wrong doers, the regulators can have much more control over the occurrences and can even take measures to prevent them before they happen- a key movement on reckless lending as many of the previous solutions were about taking measures after it had occurred.

The change proposals that were rooted in a Capitec court case earlier this year, after the court had ruled that the National Credit Regulator needed reasonable suspicion of wrongdoing to investigate a matter, are being taken to cabinet to allow for more power to act before wrongdoing takes place. The proposed National Credit Amendment Bill which would contain these empowering measures, would allow for a more transparent and consumer friendly system as the law until now did not give the NCR the power to conduct proactive investigations- as well as gave little to no clarity as to what constituted reasonable suspicion and under what circumstances they can conduct these investigations.

 “The NCR should be given the power to order regulated entities to pay administrative fines and give redress to consumers. The National Consumer Tribunal should serve as an appeal and review body for the decisions of the NCR.” – MacDonald Netshitenzhe, acting deputy director-general of the Department of Trade and Industry

Netshitenzhe also added that the National Credit Regulator should be granted the power to issue guidelines to industries in order to provide the best practices on the sale of repossessed assets by banks and other credit providers.

These proposed changes would also address the problem of properties being sold at a fraction of their market value in order for creditors to recoup debts- undermining the consumer in order to take care of their own business.

The department is proposing that the National Credit Regulator be given the power to dictate whether or not credit agreements are reckless and unlawful‚ with such lending being criminalised and directors held personally accountable for these practices rather than the staff lower down the ladder- hitting those giving the orders rather than those following them.

While not yet clear cut, these changes if fully accepted will ensure that the consumer is protected from all side. Closing in on this foul practice allows the NCR to fix matters efficiently rather than waiting on the affirmation of other departments to move forward.