NATIONAL CREDIT REGULATIONS

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NATIONAL CREDIT REGULATIONS
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Process

• Final amendments approved in National Assembly on
  13 December 2005
• President signed National Credit Act, No 34 of
  2005, on 10 March 2006
• Act expected to come into effect on 1 June 2006
• Regulations published for comment 15 Feb 06,
  for final publication in April 06
• Data verification, cleansing and removal process
  to be concluded within 6 months of Act coming
  into effect
• National Credit Regulator to be operational in
  June 2006 Consumer Tribunal within 3 months of
  Act coming into effect

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Index

• CHAPTER 1 INTERPRETATION AND APPLICATION OF ACT
• CHAPTER 2 REGISTRATION REQUIREMENTS, CRITERIA
  AND PROCEDURES
• Part A Registration requirements for all
  registrants
• Part B Cancellation of registration
• Part C Debt Counsellor
• Part D Compliance procedures
• CHAPTER 3 CONSUMER CREDIT POLICY
• Part A Credit Information
• Part B Consumer rights
• Part C Credit marketing practices
• Part D Over-indebtedness, reckless lending and
  debt counseling
• CHAPTER 4 CONSUMER CREDIT AGREEMENTS
• Part A Pre-agreement disclosure
• Part B Form of credit agreements

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Index

• CHAPTER 5 INTEREST AND FEES
• Part A Interpretation
• Part B General stipulations
• Part C Other fees, costs and charges
• Part D Interest applicable to different products
• CHAPTER 6 DISPUTE RESOLUTION
• CHAPTER 7 RECORD- KEEPING AND REGISTERS
• Part A Record-keeping
• Part B Registers
• CHAPTER 8 COMPLIANCE AND REPORTING
• Part A Credit Provider compliance reports
• Part B Debt counsellor compliance reports
• Part C Credit Bureau compliance reports
• CHAPTER 9 TRANSITIONAL PROVISIONS
• CHAPTER 10 PRESCRIBED FORMS

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Registration

• Registration requirements
• Regulations provide detail as required by the Act
  in respect of -
• Application for registration
• Disqualification of natural person from
  registration
• Conditions of registration
• Review of condition of registration
• Certificate of registration
• Voluntary cancellation of registration

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Registration

• Further criteria for registration as a debt
  councellor
• Education
• Grade 12 or equivalent Level 4
• Successful completion of debt councelling course
• Experience and competence
• minimum of two years working experience in any of
  the following fields-
• consumer protection, complaints resolution or
  consumer advisory service
• legal or para-legal services or
• accounting or financial services
• demonstrated ability to manage his/her own
  finances at the time of applying for registration

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Compliance procedures

• Compliance procedures
• Appointment of inspectors and investigators
• Notice to unregistered persons
• Compliance notices
• Objection to notices
• Administrative fines
• Calculation of annual turnover

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Credit Bureaux

• Regulations for the regulation of Credit Bureaux
• Maximum periods for which consumer credit
  information may be displayed
• Standards for the maintenance and retention of
  records
• Prohibited information
• Purposes for which information may be used
• Standards for the submission of consumer credit
  information to a credit bureau

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Credit information

• Retention periods for credit bureau information

Categories of consumer credit information Retention period
Details and results of disputes lodged by consumers 18 months
Inquiries 3 years
Payment Profile 5 years
Adverse information 1 year
Debt Re-arrangement Earlier of 3 years or until a clearance certificate is issued
Civil court judgments Earlier of 5 years or until the judgment is rescinded/abandoned
Administrations Orders Earlier of 10 years or until order is rescinded by a court
Sequestrations Earlier of 10 years or until rehabilitation order is granted
Liquidations Unlimited period
Rehabilitation Orders 5 years
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Credit information

• Standards for maintenance and retention of
  consumer credit information
• Consumer credit records must -
• be identified by the consumers identity number
  or passport number
• remain confidential and secure
• be protected against accidental, unlawful
  destruction and unlawful intrusion
• be protected against loss or wrongful alteration
• be protected against unauthorised disclosure or
  access by any unauthorised person.

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Credit information

• Prohibited consumer credit information
• political affiliation
• medical status or history
• religion or thought, belief or opinion
• sexual orientation
• membership of a trade union

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Credit information

• Purposes for which consumer credit information
  may be used
• an affordability assessment with consumers
  consent
• a credit assessment with consumers consent
• an investigation into fraud, corruption or theft
• fraud detection and fraud prevention services
• considering a candidate for employment in a
  position that requires trust and honesty and
  entails the handling of cash or finances, with
  consumers consent
• an assessment of the debtors book of a business
• setting a limit of service provision in respect
  of any continuous service
• assessing an application for insurance
• verifying qualifications and employment
• obtaining consumer information to distribute
  unclaimed funds, including pension funds and
  insurance claims
• tracing of a consumer by a credit provider in
  respect of a credit agreement with consumers
  consent
• developing of a credit scoring system by a credit
  provider or credit bureau

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Credit Information

• Right to challenge information
• Sets out process, responsibilities
• Data verification and clean-up of credit bureau
  information to be published within 6 months after
  Act comes into effect
• Regulations to establish National Credit Register
  to be published at later date

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Prescribed information

• Prescribed information to be submitted
• Regulations require consumer to submit specific
  information in the case of -
• Application for debt review
• Regulations require credit provider to submit
  specific information in the case of -
• Pre-agreement disclosure and quotation
• Small agreements
• Intermediate and large agreements
• Statement of account
• Regulations require specific form/format for -
• Small credit agreements
• Intermediate and large credit agreements

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Interest and fees

• Calculation, levying and capitalisation
• Formula for calculation of maximum interest for
  different product groups
• Rules in respect of maximum fees
• Initiation fee
• Monthly service fee
• Detail provisions related to the levying and
  capitalisation of interest and fees
• Other permitted fees
• Default administration charges
• Collection costs

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Interest limit Initiation fee Initiation fee may never exceed 15 of the loan amount Service fee
Mortgage agreements Mortgage agreements 20 R1000 to R5000 increasing by 5 of amount gt R1000 R50 pm
Credit facilities Credit facilities 25 R150 to R500 increasing by 1 of amount gt R1000 R50 pm
Unsecured credit transactions Unsecured credit transactions 35 R150 to R500 increasing by 5 of amount gt R1000 R50 pm
Developmental credit agreements Developmental credit agreements
for the development of a small business 35 R250 to R2500 increasing by 5 of amount gt R1000 R50 pm
for low income housing (unsecured) 35 R500 to R2500 increasing by 5 of amount gt R1000 R50 pm
Short term loans Short term loans 48 (4 pm) R150 to R350 increasing by 5 of amount gt R1000 R50 pm
Other credit transactions Other credit transactions 25 R150 to R500 increasing by 5 of amount gt R1000 R50 pm
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Registers

• Requirements for registers
• Records of registered activities kept by
  registrant
• National record of registration kept by NCR
• Register of marketing options kept by registrant
• Register of agents kept by registrant

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Compliance

• Requirements for compliance reports to be
  submitted to NCR
• Credit Provider compliance reports
• Debt counsellor compliance reports
• Credit Bureau compliance reports

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Thresholds

• Ministerial notice
• National Credit Act does not apply to agreements
  where consumer is a juristic person whose asset
  value exceeds R1 000 000
• Small agreements Below R15 000
• Intermediate agreements Between R15 000 and R250
  000
• Large agreements Above R250 000

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THANK YOU