By the end of 2017, the total debt review portfolio across the major retail banks stood at R51.5bn. That year, about R4bn was granted in the form of reduced, voluntary interest rate concessions.
We are of the view that the measures implemented since March 2005 were positive steps to deal with some areas of concern, and the figures show the positive effect of the measures.
In addition, due to the National Credit Act, in 2015 banks expunged R9.6bn across various credit agreement types. Banks continue to expunge sizeable amounts of prescribed debt on a monthly basis, in line with existing legislation and their own policies. In 2016, the annualised monthly prescription amount across the banks was R32.29bn. In 2017, the annualised monthly prescription amount across the banks was R30.926bn.
In addition, consumers can benefit from other natural person debt-relief measures, such as administration orders and personal insolvency. This illustrates that banks are supportive of targeted and sustainable debt intervention measures.
According to the National Credit Regulator’s consumer bureau market report for the second quarter of 2018, there were about 24.59-million credit-active consumers in the formal market. This represented a decrease of 3.4% when compared with the previous quarter. Consumers with impaired records have shrunk in number since 2015 and are at levels last observed in 2008.
The same report showed that the majority of consumers manage their financial matters in a responsible way and their payment performance has been improving. This is evident over the five-year period from quarter one 2013 until quarter two 2018, which showed that the number of consumers who were up to date with their payments has steadily improved. The vast majority of consumers, an average of 75%, are fully up to date or current with their payments.
The implementation of new debt intervention measures should be seen in the context of the already extensive debt intervention afforded to consumers, both voluntary and prescribed, and should aim to assist those consumers not provided with similar, adequate relief. Furthermore, such measures should not introduce uncertainty or instability into the credit market, as this will have a further negative effect on consumers and the SA economy.
What does the banking sector support? Debt intervention assistance to defined overindebted consumers:
- Whose income circumstances have changed for the worse through no fault on the part of the consumers; and
- When existing formal debt counselling processes or other mechanisms provide inadequate relief.
However, Basa and its member banks do not support legislative initiatives that look to expunge debt obligations consumers have willingly and legally taken on. This will have far-reaching consequences for the credit industry, undermining the principles of enabling a well-functioning credit market that serves consumers in a fair and equitable manner.