The National Credit Amendment Bill – Examined
The National Credit Amendment Bill
The DTI have now published a revised National Credit Amendment Bill which they will place before Parliament. This follows after consultation with the public at a series of meetings and written submissions by 45 different parties (incl Debtfree).
You can download the National Credit Amendment Bill here:
National Credit Amendment Bill 2013
Why make amendments?
The Bill addresses a lot of the issues that have come to light through litigation and abuse over the last few years. For instance in the past there was abuse by some large creditors of Section 86(10) where a creditor can try pull out of a debt review that is happening and start a second lot of legal action in another court causing confusion stress and costs to consumers.
The National Credit Amendment Bill now makes provision for (among other things):
PDAs
Registration of PDA’s – this means they are now here to stay. No doubt this has made some previously concerned people happy.
Empowering the NCR to register Payment Distribution Agents.
Good news for DC Partner, Hyphen and NPDA
NCR STUFF
Empowering the NCR CEO to delegate certain powers to other officials of the NCR.
Empowering the NCR to issue affordability assessment standards and guidelines.
Giving the NCR additional powers to take enforcement action after completing an investigation.
Introduction of “compelling grounds” concept when variation of registration is considered by the NCR.
Credit Bureau Stuff
Automatic removal of consumer credit information when accounts are paid up. This ties in with the upcoming credit amnesty .
NCT STUFF
Suspension of reckless credit agreements by the National Consumer Tribunal.
Debt Counselling Stuff
Improvement of the Reckless Credit process for Debt Counsellors.
Issuing of Clearance Certificates when short term debt has been repaid is allowed for.
Removal of requirement for DC’s to send letters to ALL Credit Providers and Clients on voluntary withdrawal – now all has been replaced with all affected Credit Providers and Clients.
Introduction of better defined requirements for registration as Debt Counsellors eg: Precluding unrehabilitated insolvents from being registered as Debt Counsellors.
Several amendments to section 86, 129,130 – including the numbering issues in the NCA which lead to a section 129 letter precluding an account being included in debt review directly.
ADRAs – Alternative Dispute Resolution
Registration and accreditation of alternative dispute resolution agents and deregistration of alternative dispute resolution agents respectively. The New wording also indicates that Reckless lending might be considered a ‘dispute’.
What’s not in the Bill & how people feel about that
Some Debt Counsellors have expressed their concern that the following issues have not received enough clarification or attention:
1) No word on who (eg. the NCR) can issue fee guidelines for Debt Counselling. At present the industry standard as laid out by the NCR is not founded on anything other than mutual agreement.
2) No debt review court process or forms have being added meaning the process will still have to follow Rule 55 of the MCA
3) In reference to Section 86(10) – it still refers to matter brought before court in terms of sec 87 which limits matters to those relating to 86(7)(b) only.
4) No permission or basis for court approval of a voluntary or agreed to reduction in interest rate and fees between the consumer and the credit provider – which some courts still don’t allow.
5) No comment on or mention of enforcement of Section 103(5) commonly called induplum which is largely being hush hushed by most creditors.
6) No clear definition of the ADR process (such as that set out in Sect 86 for Debt Counselling)
7) Jurisdiction of a DC: At present though a DC is the applicant on the debt restructuring Court Order the matter must be heard where the consumer (who is one of the respondents) lives or works.
8) Withdrawal from Debt Review before all the debt is paid off – there is now a process to issue clearance certificates but no actual legal basis for a consumer or DC to withdraw.
In conclusion
There are no doubt many other items which parties would have like to see added. It seems that the majority of new items relate to the authority of the NCR and NCT who obviously had the biggest input and authority, in the DTIs view, on the subject.