Government withdraws controversial law changes in South Africa
Minister of Trade, Industry and Competition Parks Tau has withdrawn controversial draft amendments to the National Credit Act of 2005 after facing public opposition.
The proposals, published in August, would have given credit bureaus access to a wider range of personal and financial information, including details from educational institutions.
According to department spokesperson Kaamil Alli, more than 20,000 submissions were received by the 12 September deadline for public comment, with the majority rejecting the changes.
The proposed amendments sought to expand Regulation 18, which governs what credit information can be shared with registered credit bureaus.
If implemented, credit bureaus would have been able to collect information from state institutions, courts, insurers, fraud investigators, utilities, and debt collectors, as well as educational institutions.
This would have meant that outstanding student debt, criminal records, and even data from fraud investigations could appear on individuals’ credit reports.
The draft also included changes to how consumers are identified and how credit information is submitted.
Under the proposals, individuals and small businesses would need to be identified primarily by ID or passport numbers, while additional personal details such as addresses, contact information, employers, and places of work could also be recorded.
Regulation 19 would have required more complete submissions to credit bureaus, ensuring that credit providers had extensive information before granting loans.
Law firm ENSafrica noted that the amendments were aimed at improving the accuracy of credit records and strengthening risk management practices.
Small businesses and their related parties would have faced more stringent checks when applying for funding, as the regulations would have extended to assessing their financial positions in greater detail.
However, the public pushback was overwhelming. The Department of Trade, Industry and Competition said the volume of feedback highlighted the strength of South Africa’s democratic processes.
Alli added that Tau is committed to re-examining the proposals, particularly in areas affecting students and small businesses, and will engage with stakeholders to address concerns.
The minister also emphasised the need to balance consumer protection with efforts to improve access to finance for micro, small, and medium enterprises, which continue to face significant funding challenges.
South Africans rely on debt to make ends meet
While the government argued that these changes would’ve strengthened the credit system, they came at a difficult time for South Africans.
Many households are already under severe financial pressure and rely heavily on loans just to get by.
DebtBusters’ Debt Index showed that 91% of people applying for debt counselling in the first quarter of 2025 had at least one personal loan, and 37% also had payday loans.
Benay Sager, Executive Head of DebtBusters, said that while consumers may feel a little more positive, personal loans, especially one-month loans, remain a lifeline for many, because income has not kept pace with rising expenses.
A recent report from Eighty20 paints a similar picture. Its Credit Stress Report for the second quarter of 2025 showed that overdue balances on home loans and credit cards are rising quickly.
“We’ve also seen an increase in the number of defaulting loans for the first time since early 2023,” Eighty20 said.
According to the report, the average South African with credit spends 28% of their net income on debt repayments.
Tau’s department insisted the changes are needed to protect both consumers and the credit industry. “The proposed amendments aimed to refine and enhance the regulatory framework governing credit providers and credit bureaux,” it said.
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