News Column

Committee seeks changes to credit bill

February 19, 2014

Linda Ensor



Parliament's trade and industry portfolio committee has requested permission from the National Assembly to introduce changes to the National Credit Amendment Bill that were not in the original bill tabled by the Department of Trade and Industry.

The new proposed amendments include a clause revising the governance structure of the National Credit Regulator (NCR) to remove the board and make it directly accountable to the minister. Another one makes it an offence for credit providers to charge more than the maximum capped interest rate, which the committee believed would lower excessive credit costs.



Committee chairwoman Joan Fubbs said the proposed amendments related directly to the implementation of the bill once it became law, and had arisen during the public hearings.



The debate on the bill in the National Assembly is scheduled for Tuesday (25 February) and the committee hopes to formally adopt it by Friday (28 February) at the latest.



The committee has held public hearings on the bill. Submissions were made by banks, payment distribution agents, the debt counselling and micro-finance sectors, the Reserve Bank, the Treasury and others.



Adverse credit information



The bill also deals with the removal of listings of adverse credit information by credit bureaus, the regulation of affordability assessments by the trade and industry minister, as well as tightening of debt counselling.



Despite banking industry objections, the committee has agreed with the department that affordability assessments be governed by regulation - in consultation with the industry - rather than self-regulation through an industry code of conduct.



Fubbs said in an interview the committee felt there was "no need for the board". It recognised that the amendment bill would impose more responsibilities on the NCR, for example the registration of payment distribution agents (PDAs), which would need to expand capacity.



Also, members of the committee wanted to introduce clauses providing that the cost of credit insurance be regulated and/or capped, and that debt collection costs under other legislation be capped in consultation with the relevant cabinet minister.



Emolument attachment orders related to debt collection should be regulated.



The committee decided that a new clause should be introduced making it an offence for debts to be collected, sold and reactivated if they have become prescribed under the Prescription Act.



It also wanted to include a clause that enabled the minister to prescribe additional regulations based on the proposed amendments in the bill relating to:



- A test for "fit and proper" persons;

- The process for deregistering PDAs;

- The duties, obligations and fees of PDAs and alternative dispute resolution agents;

- A formula for penalties for the late renewal of registration;

- The termination of or withdrawal from debt review process;

- The criteria used to determine if an applicant's commitments to prescribed guidelines were sufficient.



Source: Business Day via I-Net Bridge

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