On 24 November 2017, the draft National Credit Amendment Bill was published for public comment.
Written comments on the Bill were due by 15 January 2018 and public hearings are scheduled to take place between 30 January and 1 February 2018.
The Amendment Bill, should it pass, is expected to have a significant impact on the lives of thousands of ordinary South Africans as well as large parts of the finance and banking sectors.
“In simple terms, the draft Bill permits a person who, as at 24 November 2017, earns less than R7,500.00 per month and who owes less than R50,000 in unsecured debt relating to credit agreements, to make an application to the National Credit Regulator for debt intervention,” said Eugene Bester of law firm Cliffe Dekker Hofmeyr.
“If the National Credit Regulator is of the view that the applicant requires assistance, a single member of the National Credit Tribunal can suspend all qualifying credit agreements in part or in full for a period of 12 months.”
“If the financial circumstances of the applicant do not improve, the Tribunal can declare the debt under the qualifying credit agreements extinguished. All or part of the debt under the qualifying credit agreements can be extinguished.”
The Amendment Bill also has a second debt intervention aspect which is totally separate to the debt intervention referred to above.
“Under this aspect, the the minister of Trade and Industry may prescribe debt intervention measures to alleviate household debt where an occurrence has constituted a significant exogenous shock that caused widespread unemployment, or there has been a regional natural disaster or something similar that is of enormous public interest,” said Bester.
This debt intervention by the minister is only applicable to indigent persons, consumers who earn less than R7,500, or persons who suffered unforeseen loss of income or who are subject to adverse conditions in a sector that has been identified by the minister.
In an analysis of the possible impact of the new amendments, Bester said that there are likely to be a number of far reaching consequences for credit providers across the country.
“It cannot be disputed that a significant number of consumers are over-indebted,” he said.
“This is borne out by the fact that in excess of R40 billion was the subject matter of debt review in terms of the National Credit Act as at December 2016. Financial institutions, during the 2016 calendar year, granted interest rate concessions in excess of R3 billion.”
He warned that there may be a mixed public response to the outlines set out by the Amendment Bill, especially the reaction of a person who earns R7,510 and has debt marginally in excess of R50,000 who will not be qualify for assistance under the proposed laws.
“Similarly, the cut off line of 24 November 2017 will not be welcomed by a person, who on the 25th November 2017, earned less than R7,500 and had unsecured debts less than R50,000,” he said.