Download the New Act
The National Credit Amendment Act 7 of 2019 has been signed into law and prevents consumers with yet another mechanism to deal with debt. This time that is debt review done by the National Credit Regulator (called debt intervention). The process is particularly for consumers with smaller debts.
The new act also makes it necessary for Debt Counsellors to investigate all debts for reckless credit, to report any possible reckless credit to the National Credit Regulator or face fines or possibly imprisonment. Recently the National Credit Regulator introduced new fees for the industry including a reckless lending investigation fee. Since these investigations will now be obligatory for all Debt Counsellors in all cases (as is already set out in an NCR task Team guideline) this seems appropriate. The NCR has however only issued a guideline on the fees (R1500) and the DTI has not published any regulations on the matter. The good news is that registrants are allowed to charge less than the guideline should they so desire.
Everyone Is Nervous
Many Debt Counsellors are concerned since reckless credit investigations make credit providers nervous and defensive (due to big fines that can result) and because they may find themselves in big trouble and receiving massive fines if they fail to report any possible reckless credit. Since credit can be declared reckless for a variety of reasons (legally) some wonder if they should not report all matters to avoid possible prosecution. This will ironically probably just upset the NCR and swamp them with thousands of possible cases to investigate.
‘Certainly, the banks’ attorneys are about to become much richer having to defend thousands of new possible reckless matters every month’
Many credit providers are concerned since the new law requires them to provide documentation it is hard for them to find (if they have it at all) within 7 days and provide it to Debt Counsellors. Since all matters must now be investigated they would like to see Debt Counsellors investigating without the contracts and pre agreements and all the documents (which would need to be checked for illegal clauses and signatures and the all important affordability assessments). This is going to push up the cost of helping these consumers through debt review (and debt intervention) and open them up to millions of rand in possible fines over reckless matters. Certainly, the banks’ attorneys are about to become much richer having to defend thousands of new possible reckless matters every month.
Be sure to download a copy now and consider how this will change the way your debt counselling firm or credit providing business will conduct itself.
Download the NCA Debt Intervention Amendment Act