Amendment to National Credit Act

[Dave A]

the New Credit Law will Enable Government to Crack on Illegal Lenders
Media statement from the DTI.

President Jacob Zuma has signed into law the National Credit Amendment Act, 2014. The Minister of Trade and Industry, Dr Rob Davies says this will amongst others offer more protection to consumers against irresponsible/ reckless lending practices. He said it is unacceptable that 50% of about 21 million credit active consumers' records are impaired, and many are currently unable to access credit and employment due unsecured lending and irresponsible lending practices.

Minister Davies says it is an obligation of the government to protect vulnerable consumers against unscrupulous practices. This law will improve the effectiveness of Debt Counselling, Debt Review, and the work of Payment Distribution Agencies

"Currently a lot of credit is extended recklessly against the spirit and objectives of the Credit Act. Our investigation in Marikana found that 100% of the lenders looked at, did not adhere to the Act, thus leading to reckless credit. The National Credit Amendment Bill (NCAB) therefore empowers the Minister to prescribe affordability assessment regulations to achieve uniformity and consistency in this area. The affordability assessment regulations will include elements relating to discretionary income as well as determine the buffer in respect of income that should not be taken into account when conducting affordability assessments. This will assist as most credit providers have provided credit to the maximum of the consumer's income, leaving the consumer with not much income for other things", said Minister Davies.

Davies added that government will be able to crack down on illegal lenders as all lenders are required by the Law to register with the National Credit Regulator (NCR)

So far so good. That seems pretty much in line with what I thought they were trying to achieve the first time around. However, this next bit gets really interesting, though:

"The NCAB requires that all credit providers must be registered, irrespective of the threshold or number of credit agreements

Now that's quite a significant change!

I wonder what else has wandered into this amendment to give micros and start-ups a tougher time getting going?

[Greig Whitton]

The mandatory registration for all credit providers is absolutely a big deal since it will burden qualifying small enterprises with even more red tape (remember, "credit provider" status doesn't hinge on whether your business extends customer credit or not - it can also apply if, for example, you provide employee loans).

From what I understand, all credit providers will also need to comply with uniform credit affordability assessment criteria that will replace the self-regulation and industry codes of conduct that allowed reckless lending to persist. Which is good from the perspective of good governance, but not so awesome if you're running your own business and need to comply since it will be yet another regulatory responsibility to attend to.

Finally, there has been the whole credit amnesty debacle whereby credit bureaus have to expunge averse credit information of rehabilitated defaulters. The risk, from a business owner's perspective, is that you might run a background credit check that comes up clean even though the person may have been blacklisted previously. However, I'm not entirely sure whether this was a limited time event or an ongoing requirement.

[ACEsterhuizen]

Ok so does this mean I, as a small one man show business, cannot charge my customers interest on late payments? Must I register before I can charge them according to clause 4 and 5 (Incidental credit)?

Sorry I see this is an old thread, but some of my customers was "on a course" (June 2016) and apparently i may not allowed charge interest on overdue accounts if i am not registered? It is now "against the law"?