Pretoria – The chairperson of the Portfolio Committee on Trade and Industry, Joan Fubbs, says the banking sector must lend money in a responsible way that will not contribute to consumers drowning in debt.
Speaking at the Credit Amendment Act conference hosted by the Department of Trade and Industry (the dti) in Boksburg, Fubbs said most people who are struggling with debt are still borrowing from one institution to pay the other, and that many of them are borrowing for consumption and not for investment.
“As the credit sector, you need to run your affairs in the spirit of our Constitution and ask what it is that you are doing to transform the credit situation in the country,” she said.
She said there were still challenges with regards to enforcement of affordability tests and emolument attachment orders. She urged stakeholders to tackle these challenges to reduce over-indebtedness.
Fubbs said the National Credit Amendment Act played a major role in saving South Africa from the global economic crunch in 2007.
However, she warned that if institutions, government and the private sector do not work together with clients in a responsible manner, whatever acts the country has in place will not be effective in protecting consumers.
Professor Michelle Kelly-Louw of the University of South Africa said the other causes over-indebtedness, besides reckless lending, had to be examined.
She said as a measure to curb the situation, government needs to use the set regulations to prevent over-indebtedness and not just look at ways to cure it.
“Credit providers should not allow credit to escalate to over-indebtedness. They need to look at the age of the person requiring credit and the work they do and whether they can actually afford the credit,” Kelly-Louw said. - SAnews.gov.za
