Breathing space for black-listed consumers

Thursday, September 5, 2013

Pretoria – Previously black-listed consumers have been given a new lease on life.

Cabinet has approved a proposal that will soon allow those consumers who manage to settle their debt and can afford to take up more debt access credit as soon as they have settled their debt.

Briefing journalists on Tuesday, following a Cabinet meeting, Cabinet spokesperson Phumla Williams said denying previously black-listed consumers credit “hinders growth”.

She said this as many South Africans struggle to access credit either due to negative rating due to late payments on their study loans, default judgements from unpaid clothing or furniture accounts and those who approach the National Credit Regulator to get help with the management of their debt.

“The key to the option is to ensure that those that have settled their debt and they are able to afford [taking up more] debt should be allowed to do so. They shouldn’t be disadvantaged by the five years waiting period because if you may be aware currently what tends to happen is that even if you have settled your debt, you still have to wait for a period of five years.

“The proposal that has been made is to ensure that those that have settled their debt are able to continue their lives in terms of doing the business that they may wish to engage in,” she said.

This proposal will soon come into effect after the Cabinet approved the recommendations of the Select Committee on Trade and International Relations following a report from the Removal of Adverse Credit Information Project.

The report’s recommendations were first discussed in Parliament last year after it was noted that denying credit to those that were previously blacklisted without considering affordability was detrimental not only to consumers, but to the economy.

Williams said the Department of Trade and Industry still needed to conclude internal processes before the Cabinet’s decision can come into effect.

National Credit Amendment Bill approved

Meanwhile, Williams also said Cabinet had approved several other Bills, including the National Credit Amendment Bill for introduction to Parliament with an aim of assigning the national regulators more powers to implement and enforce critical credit provisions.

“The Bill aims to strengthen the capacity of the National Credit Regulator (NCR) to address certain challenges especially around court processes and to strengthen enforcement and implementation of the provisions of the National Credit Act 34 of 2005,” Williams said.

She also said that central to the challenges that led to the amendment to the Bill was that while the regulator would give consumers amnesty, there were loopholes that would see consumers being trapped in spiralling debt when they, for example, applied for more credit cards while they are undergoing debt counselling. –

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