Credit Amnesty Project

1
Credit Amnesty Project

• Select Committee on Trade and International
  Relations

2
Consultations with stakeholders

• The NCR has met and discussed the Credit Amnesty
  Project, including the proposed data removal,
  affordability guidelines, and additional measures
  with
• The Banking Association of South Africa
• The Credit Providers Association
• The Micro Finance South Africa
• The Consumer Goods Council
• The National Clothing Retail Federation
• The Credit Bureaux Association
• The Registrar of Banks
• The NEDLAC

3
NCR Report Commissioned

• The NCR commissioned Stephen Logan an independent
  consumer credit consultant to investigate and
  report on
• the proposed data removal exercise
• possible affordability assessment guidelines
• credit literacy initiatives and
• additional measures to assist consumers.
• The report is nearly complete but has not been
  finalised. The following key findings have been
  made
• there is significant support for appropriate
  affordability assessment guidelines
• there is significant support for appropriate
  credit literacy programmes

4
Key findings of consultant's report

• The following key findings have been made
• there is significant opposition from credit
  providers and credit bureaux to the removal of
  any credit information
• nevertheless, it is submitted that it is possible
  to significantly improve the credit records of
  credit impaired individuals
• it is possible to achieve a marginal increase in
  credit acceptance rates through a limited data
  removal exercise
• any data removal exercise should only take place
  after affordability assessment guidelines have
  been implemented and evaluated

5
Key findings continued

• consumers lack sufficient understanding of the
  risks and obligations of entering into credit
  agreements and far greater effort must be made to
  enhance credit literacy
• any data removal exercise must be accompanied by
  significant education, particularly to explain
  that
• any data removal exercise does not amount to
  writing off the payment obligation
• a clear credit record is only one consideration
  in applying for credit
• consumers should exercise caution when applying
  for and using credit.

6
NCR Impact Assessment

• The NCR appointed Matlotlo Group (Pty) Ltd an
  independent firm of actuaries and analysts to
  conduct an impact assessment of the likely impact
  of various data removal scenarios, incl
• number of consumers' impacted
• degree to which consumers' impacted
• credit acceptances
• risk to credit providers' portfolios
• The impact assessment is complete and key
  findings include
• The removal of judgment information would not
  significantly benefit credit impaired consumers
• The removal of dormant information would not
  significantly benefit credit impaired consumers

7
NCR Impact Assessment Findings cont.

• The removal of adverse information under R10,000
  would assist some credit impaired consumers to
  obtain micro loans
• The removal of adverse information under R10,000
  would benefit 86 of people earning less than
  R15,000
• The portfolio risks of credit providers would not
  be adversely affected by a data removal exercise
  focussed on adverse information under R10,000.

8
Amendments to National Credit Act

• As part of a larger exercise, the Department of
  Trade and Industry is busy assessing what changes
  need to be made to the National Credit Act.
• Key aspects, in regards credit impairment,
  receiving consideration include
• the automatic removal of paid up judgments
• the automatic removal of paid up defaults
• the introduction of adverse listing rules
• criminalising the collection and listing of
  prescribed debts
• limiting access to credit records by employment
  agencies

9
Way forward

• Once the consultants report has been finalised
  the NCR and dti will discuss the recommendations
  made, consult further with stakeholders and
  determine how best to proceed.