The days of reckless credit providers going unpunished could be numbered‚ as the Department of Trade and Industry plans to empower the National Credit Regulator (NCR) to fine them.
Currently‚ only the National Consumer Tribunal has this power‚ but it has a backlog of unheard cases‚ dating back to 2013‚ and has imposed inconsequentially small fines on the companies involved.
The department’s acting deputy director-general MacDonald Netshitenzhe told parliament’s trade and industry committee at the weekend that a proposal had been submitted to cabinet to amend legislation to empower the NCR to impose fines‚ allowing it to conduct proactive investigations and implement a debt-relief programme.
The NCR supports the idea of a debt-relief programme for heavily indebted retrenched workers and has already started engaging with the banks on how they can participate voluntarily in the programme.
NCR chief executive Nomsa Motshegare suggested that the surpluses of state entities could be used for the debt forgiveness.
The Unemployment Insurance Fund‚ for example‚ had an accumulated surplus of R90-billion at the end of the March 2015 financial year‚ and the skills‚ education and training authorities are also sitting on a cash pile.
“We don’t want credit providers to fund these losses unless it is reckless lending‚” Motshegare said.
She said debt forgiveness programmes were common across the world. Such a programme should be once-off and targeted specifically at retrenched workers who no longer had the ability to continue paying debts.
The DA was very critical about the lack of enforcement of the National Credit Act‚ which DA MP Dean Macpherson said explained why companies persisted with their illegal activities – because they knew they could get away with it and that the penalties were inconsequential.
The National Consumer Tribunal’s chief executive Marelize Bosch noted that the tribunal faced a deluge of debt rearrangement cases that amounted to about 1600 cases a month since February last year‚ giving a total of 19097 cases for the 2015-16 year‚ with 27407 cases forecast for the current year.
“Over a three-year period‚ the tribunal’s case load has almost quadrupled‚” Bosch said‚ but its financial and human resources had not increased commensurately. Currently‚ the tribunal has 11091 matters that are not finalised.
Between 2011 and this year‚ only 56 cases were reported to the police by the regulator‚ with the majority of them still under investigation.
All of them related to the illegal retention of consumers’ bank cards‚ PIN numbers and identity documents‚ Bosch said.
The highest admission of guilt fine paid so far was R12500 and not a single case had been referred to court for prosecution.
DA MP Geordin Hill-Lewis said vulnerable consumers were left unprotected because of the length of time it took the tribunal to deal with their cases.
State fights reckless lending
Currently‚ only the National Consumer Tribunal has this power‚ but it has a backlog of unheard cases‚ dating back to 2013‚ and has imposed inconsequentially small fines on the companies involved.
The department’s acting deputy director-general MacDonald Netshitenzhe told parliament’s trade and industry committee at the weekend that a proposal had been submitted to cabinet to amend legislation to empower the NCR to impose fines‚ allowing it to conduct proactive investigations and implement a debt-relief programme.
The NCR supports the idea of a debt-relief programme for heavily indebted retrenched workers and has already started engaging with the banks on how they can participate voluntarily in the programme.
NCR chief executive Nomsa Motshegare suggested that the surpluses of state entities could be used for the debt forgiveness.
The Unemployment Insurance Fund‚ for example‚ had an accumulated surplus of R90-billion at the end of the March 2015 financial year‚ and the skills‚ education and training authorities are also sitting on a cash pile.
“We don’t want credit providers to fund these losses unless it is reckless lending‚” Motshegare said.
She said debt forgiveness programmes were common across the world. Such a programme should be once-off and targeted specifically at retrenched workers who no longer had the ability to continue paying debts.
The DA was very critical about the lack of enforcement of the National Credit Act‚ which DA MP Dean Macpherson said explained why companies persisted with their illegal activities – because they knew they could get away with it and that the penalties were inconsequential.
The National Consumer Tribunal’s chief executive Marelize Bosch noted that the tribunal faced a deluge of debt rearrangement cases that amounted to about 1600 cases a month since February last year‚ giving a total of 19097 cases for the 2015-16 year‚ with 27407 cases forecast for the current year.
“Over a three-year period‚ the tribunal’s case load has almost quadrupled‚” Bosch said‚ but its financial and human resources had not increased commensurately. Currently‚ the tribunal has 11091 matters that are not finalised.
Between 2011 and this year‚ only 56 cases were reported to the police by the regulator‚ with the majority of them still under investigation.
All of them related to the illegal retention of consumers’ bank cards‚ PIN numbers and identity documents‚ Bosch said.
The highest admission of guilt fine paid so far was R12500 and not a single case had been referred to court for prosecution.
DA MP Geordin Hill-Lewis said vulnerable consumers were left unprotected because of the length of time it took the tribunal to deal with their cases.
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