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NCR appear at Parliament

In the wake of the collapse of African Bank into curatorship theDCI began to ask hard questions about the role of the National Credit Regulator (NCR) in curbing reckless credit granting at African Bank. During the ensuing back and forth between theDCI and the NCR the Democratic Alliance and Communist Party (SACP) also began to wonder if the NCR had taken sufficient steps when investigating African Bank a short while back. The DA called for a Parliamentary hearing before the Trade and Industry Portfolio Committee (who recently helped draft the National Credit Amendment Act 2014).

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The NCR were asked to come to Parliament on Friday 22nd August 2014 to defend themselves and answer questions.

The ‘Hearing’

What was anticipated to be a very serious question and answer session quickly became something else as the chairperson of the committee indicated that probes into anything to do with African Bank were sensitive and that the DA should back down. It was clear that the hearing was not going to spark any concerns in the minds of consumers. Questions into the NCR’s actions regarding African Bank were cut short. The majority of the meeting was taken up by praising the NCR for it’s hard work.

Worrying statements were seemingly made about how reckless credit investigations are not in the interests of low income consumers. Very little in the way of an actual  meaningful probe was conducted. One interesting fact that did came to the fore was that the NCR had indeed investigate other branches (26 branches) of African Bank at the time of the Dundee matter (with the proposed R300 million fine). Though only the +- 700 cases of reckless lending found at the Dundee Branch in KZN were ‘sorted out’, no other matters from any of other branches were required to be rectified. Comments made made it seem as though there may have been other cases but due to the settlement agreement between the NCR and African Bank (in regard to the R20 million settlement) no other consumers matters were attended to.

Naughty Consumers

During the hearing a lot of blame was placed on consumers for convincing African Bank that they were credit worthy when they were in fact no. Little focus whatsoever was placed on whether it was a common African Bank policy to perform only superficial creditworthiness assessments and whether they had  applied themselves to analysing the information they require of consumers when applying for loans. African Bank have prided themselves on providing credit to those who previously have had little exposure (and thus experience) to it. Many would describe these consumers as High Risk. Most of the focus was on how events in the economy affect consumers ability to repay loans granted and not reckless lending practice. There was mention made of new measures in the proposed regulations (draft regulations now out for comment from the DTI) for the NCAA2014 which will set more stringent requirements for credit providers when granting loans. This seemed to indicate that there is a problem but in the future things will be better so the DTI (with the help of the NCR) had taken action (just not in time to help African Bank).

 

The press are now publishing stories about how the NCR have been ‘let off the hook’ and the tone of most articles is very negative. The NCR have said that there are limits to what the Regulator can actually do and that consumer behaviour was to blame.

The NCR no doubt left feeling great and basking in all the praise while others who had raised concerns left disappointed that the matter only received a superficial glance.