NCR to be Empowered to Fine Reckless Lenders

Predatory credit providers could be in for trouble‚ as the Department of Trade and Industry (DTI) is preparing to give the National Credit Regulator (NCR) power to fine reckless lenders. Presently‚ only the National Consumer Tribunal (NCT) can do this.

However, it has a backlog of unheard cases that date back to 2013‚ and has only imposed very small fines on guilty parties so far. A proposal in support of amending legislation to give the NCR the power to impose fines, enabling it to investigate and provide debt relief, has been submitted to cabinet‚ said DTI deputy director-general MacDonald Netshitenzhe.

‘DTI…to give the National Credit Regulator power to fine reckless lenders’

Debt Forgiveness

The NCR favours the notion of a debt relief programme for deeply indebted retrenched individuals and has already met with the banks to discuss voluntary participation in the programme. State entity surpluses could be made use of for the debt forgiveness, suggested NCR chief executive Nomsa Motshegare.

At the end of the March 2015 financial year, the Unemployment Insurance Fund (UIF) had a surplus of R90-billion, and the skills‚ education and training authorities had also accumulated a significant surplus.

“We don’t want credit providers to fund these losses unless it is reckless lending‚” Motshegare explained.

Debt forgiveness programmes are commonly implemented across the globe, she said. The programme should be once-off and aimed particularly at retrenched individuals who were no longer able to pay off their debts.

‘NCR favours the notion of a debt relief programme for deeply indebted retrenched’

Vulnerable Consumers Unprotected

The lack of enforcement of the National Credit Act (NCA) is allowing reckless lenders to continue with their illegal practices. They know they can get away with it and that the fines are minor, said DA MP Dean Macpherson. The tribunal has been inundated with 1600 debt rearrangement cases monthly since February 2015. This amounts to 19097 in total last year‚ with 27407 cases expected for 2016.

‘From 2011 to 2016‚ the regulator reported just 56 cases to the police’

“Over a three-year period‚ the tribunal’s case load has almost quadrupled‚” said Bosch. However, the NCT’s financial and human resources have not increased proportionately. At the moment‚ the tribunal has yet to finalise 11091 matters.

From 2011 to 2016‚ the regulator reported just 56 cases to the police‚ while most of them are still being investigated. All of the cases involved credit providers unlawfully retaining borrowers’ PIN numbers, bank cards and identity documents‚ said Bosch.

An admission of guilt fine of R12500 is the highest ever paid and not one case has been referred to court for prosecution. Vulnerable consumers are not being properly protected, as it takes too long for the tribunal to handle their cases.