Draft National Credit Amendment Bill Submission

Publication Date:
02/12/2018 07:12:38
1. Purpose of this document


The Draft National Credit Amendment Bill (the Bill) was published in the Government Gazette, No. 41274 of 24 November 2017, wherein comments were invited from the public in response to the Bill.

The Banking Association South Africa (BASA) would like to thank the Honourable Ms. Fubbs (MP) and the Portfolio Committee on Trade and Industry (the Committee) for extending the submission due date to 22 January 2018 and for the opportunities afforded to us to date to engage and discuss the debt intervention measures proposed by and deliberated on by the Committee to alleviate over-­‐ indebtedness. We look forward to engaging the Committee further when making our oral submissions. We request that BASA be given an hour and half to present at the public hearings due to the significant impact of the proposed Bill on the banking sector and the magnitude of our comments.
The banking sector is a critical stakeholder in the assessment, review and feasibility of the proposed debt intervention measures given that banks grant 76.3% of new credit in the market (Source: NCR Consumer Credit Market Report, Q3-­‐2017). Banks support the purposes of the National Credit Act 34 of 2005 as amended (NCA) and believe that over-­‐indebtedness is a social and economic challenge that has far reaching consequences for the economy and society. In support of consumers that became  over-­‐indebted  and  entered  the  debt  review  process,  banks  granted  concessions  to consumers (including voluntary concessions in line with the Task Team Agreements between credit providers and the NCR) of R3.425 billion in 2016 and R3,976 in 2017. Furthermore, because of the amendments to the NCA, which became operative in March 2015, an obligation was placed on credit providers  to  pro-­‐actively  ensure  that  they  do  not  collect,  re-­‐activate  or  sell  prescribed  debt. This resulted in banks expunging a total of R 9,252 billion across various credit agreement types. Banks continue to expunge sizable prescribed debt monthly, in line with existing legislation.

The aforementioned paragraph illustrates that banks are supportive of targeted and sustainable debt intervention measures. The implementation of any new measures should not introduce instability into the credit market as this will have a further negative impact on society and the South African economy.

To this end, BASA and its member banks are busy conducting an assessment to understand the system-­‐wide impact of the proposed Bill, amendments to the NCA, from both a quantitative and qualitative perspective, on the South African economy and society. The results of our impact assessment will assist in constructively informing the Committee’s legislative considerations and will be submitted to the Committee on 7 February 2018, as was confirmed by the Secretary of the Committee.

This submission encapsulates BASA’s response to the proposed Bill. Following the Committee’s receipt of our submission, BASA would welcome further engagements with the respective stakeholders, as well as the Committee and the Parliamentary Legal Advisor, to respond to any questions in respect of and discuss in greater detail the specifics contained in our submission.

Download the full document here: Draft National Credit Amendment Bill Submission

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© The Banking Association South Africa 2018