Reading Time: 2 minutes

Credit Industry Forum – Jan 2014

NCR logo

Yesterday saw the Credit Industry Forum or CIF meet in Gauteng for the first time in 2014. The CIF met to discuss issues raised in late 2013 such as credit providers not implementing a very important part of the National Credit Act.

 

 

 

The Section in question is NCA Section 103(5). This section of the NCA limits how much interest (and other charges) a creditor can charge a consumer once they miss payments (or go into default) on a debt. The limit is twice the amount owed when they miss a payment. The calculation is very simple. The default debt amount (e.g R1000) doubled (x2). For Example R1000 x 2 = R2000. This would include all fees to collect and any interest etc. This means that once the consumer has paid back R2000 in total over however many months or years then the debt is settled and the creditor has to close the account no matter what their computers show the balance actually is without the Sect 103(5) limit.

Toothless?

Sadly many creditors continue to ask consumers to pay beyond this limit in contravention of the National Credit Act. Particularly is this an issue in the case of garnishee orders (EAO’s). Credit providers have said they are struggling to get their computers to accept this limit since they have old computer systems and have many other factors which need to be taken into account. The NCR and Debt Counsellors want to see this issue receive attention and have been pushing for years (since 2007) to see this put in place. So far, for the last 7 years Credit Providers have managed to delay proper implementation and regulation of this section. Will the CIF be able to succeed where the Debt Review Advisory Committee (DRAC) failed? It is doubtful. It seems likely that only a series of hearings and fines from the NCT will see the issue receive sufficient attention.

This issue and others were set to be reported on by  special sub committees which were commissioned in December 2013.