About 10 million South Africans are over-indebted, which means they are unable to meet their financial obligations timeously.
The National Credit Regulator (NCR) briefed Parliament’s Standing Committee on Trade and Industry on Tuesday morning about the state of South Africa’s credit market and its financial performance, among other matters.
As at the end of September 2015, South Africa’s gross debtors’ book stood at a whopping R1.63 trillion, while the total credit rand value of new credit granted to consumers was close to R124 billion, said Nomsa Motshegare, CEO of the NCR.
Members of the committee wanted to know from the NCR what measures it has put in place to ease the burden of consumers who are over-indebted and struggling to repay their loans, and how it will act against reckless lenders.
The ANC’s Adrian Williams suggested that the regulator consider a kind of “debt forgiveness programme”, which would reprieve lower income groups. “This shouldn’t be for the rich who have just been spending recklessly.”
Committee chairperson Joanmariae Fubbs from the ANC added that debt forgiveness programmes have been implemented successfully in both developed and developing countries.
The NCR’s Motshegare said in her presentation to MPs that the credit regulator is continuing its investigations into reckless lenders, the overcharging of fees and misleading advertisements.
“Lewis Group has for example agreed to pay a total of R75 million to refund consumers since we’ve started the investigation last year.”
Forty-four of the investigations have been referred to the National Consumer Tribunal for hearings, one of which is the probe into Lewis Group.
Fin24 reported last year that in one instance Lewis charged a customer repayments of R18,000 after buying a washing machine for R6,000. Another customer bought a laptop, but was charged a compulsory R650 for a delivery fee, although the customer carried it out of the store. There was also R741 charged for an extended warranty.
During question time, the Democratic Alliance’s Geordin Hill-Lewis said the NCR appears unable to exert sufficient control over alleged reckless lenders such as African Bank and the Lewis Group.
“In recent months there have been numerous exposures of nothing short of viperous conduct of lenders, such as the Lewis Group. It’s not good enough to refund R67m to customers who had been overcharged when they made much more money than that with the scams they were running.
“Why doesn’t the NCR, the Hawks or the Reserve Bank take serious actions against these institutions? This reinforces the perception that there are no consequences for such behaviours,” Hill-Lewis said.
Motshegare responded by saying it is often difficult for the legal representatives at the National Consumer Tribunal to agree on dates for the hearings of the investigations that have been referred to the institution.
Fubbs concluded by saying that the committee would request the tribunal to appear before Parliament to give an update on the hearings of the investigations referred to it.
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