National Credit Act practical implementation

[Dave A]

I've just been discussing the practical aspects of implementation of the National Credit Act with a debt collection agency. Some aspects still need to be cleared up, but there has been some progress.

Additional regulations were published on 30th November 2006 which deals with much of the administrative issues. The relevant Government Gazette can be found here.

I've done a quick skim - it does clear up quite a few issues in respect of blacklisting. When I get a chance, I'll post a summary of the implications.

[Eugene]

Despite the government gazette update of November which cleared up some issues regarding blacklisting, much confusion still exists regarding the practical implimentation of the act after 1 June 2007 - especially in the debt collection industry. For example: if I buy goods from a furniture retailer on 31 May 2007 (a day before the Act kicks in) and I refuse to pay the following month (when the new Act is in operation). Will the old Credit Agreements Act conditions still be in force as it has been repealed by the new Act? How will defaulting consumers then be summonsed (as usual in terms of the "old" Act or the new Act or a combination of both?) With regards to the statutory letter of demand (as contemplated in the "old" section 11 of the Credit Agreements Act): will that time frame of 30 days still be in force or will it have to be changed to the new time limits of the NCA? These are just a few questions which seems to be unanswered - even a call to the legal department of the National Credit regulator could not give me clear and simple answers. Can anyone help?

[Dave A]

I think there's going to be fair amount of "winging it" during this change over.

Here's something I got from Standard Bank.

The National Credit Act (NCA) comes into effect in June 2007. The act is designed to better regulate all players in the credit market as well as to improve consumer protection. All loans granted by us to personal customers, and in some cases to those seeking business banking services, will be governed by the new act after June 2007.

We fully support the objectives of the NCA and have, over the past 12 months, been preparing to comply with the new legislation. As a result, some of our processes will change from June 2007 and you may be affected by the following:

• We may ask you for additional information when you apply for a new loan. In this regard, we encourage you to bring documents such as copies of payslips, bar-coded identity documents and proof of residence with you when you apply for a loan.
• We are required to ensure that you understand the risks, obligations and costs associated with any loan. Our consultants will explain these in detail to you when you apply for a loan.
• Some of our application forms and documents have also been changed.

If you have any questions or need more information, our branch staff will be able to assist you. Further details are (blah, blah)

You know what - that doesn't sound like much more than business as usual. But I'll try to snaffle a copy of the "new" fine print and see if anything's changed really. I've got some finance docs to sign on Friday...

I think the wrinkles on the real practicalities are only going to really shake out down the line. My best suggestion is that we all keep a sharp eye out for anything really useful and help each other's response time in adjusting to any revealed kinks.

From my side, I'll try to do some more homework on this over the coming weekend (or earlier if I catch a break to do some work on it).

[duncan drennan]

Eugene I wish I could give some insight, but I'm not too clued up on the issues. I suspect that some things will only be clear once they have been tested in court

I'm not sure if it will help, but maybe follow the links here to have some info sent to you.

[duncan drennan]

These are just a few questions which seems to be unanswered - even a call to the legal department of the National Credit regulator could not give me clear and simple answers. Can anyone help?

So how did that call with the National Credit regulator go?

[Eugene]

Apart from a couple of eish's and long silence, I was none the wiser.

[Dave A]

I think that seals it. Hidden obstacles ahead I reckon.

[duncan drennan]

Apart from a couple of eish's and long silence, I was none the wiser.

[Johan]

I do not believe the NCA is such a monster, it has and will unfortunately create a lot of misunderstandings especially with some clients and the media unfortunately does play a major roll in this misinformation in that only the half of the story that has news value would be published. Yes the Act in itself still will have to be tested in courts whom I believe is at present as confused as many of the public. Who the Debt Counselors will be and the exact roll they will play considering their expertise is also still to be seen

[duncan drennan]

Hi Johan, welcome to the Forum Nice to have you here.

I do not believe the NCA is such a monster

I think the tricky thing for most people at the moment is that it is an unknown monster. It seems to be a good thing, but there are a few questions around how it can impact on our business. Does it mean that debtors can worm out of paying us, etc? It seems to be consensus that we'll have to wait for some case law to clear up the details.

[Eugene]

I totally agree with Johan (I should as he is a collegue in the office next to me) and with regards to my previous post I might add the section 7 of Schedule 3 of the NCA:

General preservation of regulations, rights, duties, notices and other instruments
7. (1) A registration that had been issued in terms of section 15A of the Usury Act, 1968 (Act No. 73 of 1968), by an authority administering exemptions under that section, for an indefinite term and in force immediately before the effective date, has a duration, as from the effective date, of the period determined by regulation for that category of
registration.
(2) Any other right or entitlement enjoyed by, or obligation imposed on, any person in terms of any provision of the previous Act, which had not been spent or fulfilled immediately before the effective date must be considered to be a valid right or entitlement of, or obligation imposed on, that person in terms of any comparable provision of this Act, as from the date that the right, entitlement or obligation first arose, subject to the provisions of this Act.
(3) A notice given by any person to another person in terms of any provision of a previous Act must be considered as notice given in terms of any comparable provision of this Act, as from the date that the notice was given under the previous Act.
(4) A document that, before the effective date, had been served in accordance with a previous Act must be regarded as having been satisfactorily served for any comparable purpose of this Act.

Bottom line would therefore be that: although the old Credit Agreements Act have been repealed and replaced with the NCA, the rights and obligations as per the old Act will still be in force for that specific matter. So Duncan I believe that debtors will not be left with a loophole to sidestep their obligations when it comes to paying your debt.

[Rebel]

Hi Johan, welcome to the Forum Nice to have you here.



I think the tricky thing for most people at the moment is that it is an unknown monster. It seems to be a good thing, but there are a few questions around how it can impact on our business. Does it mean that debtors can worm out of paying us, etc? It seems to be consensus that we'll have to wait for some case law to clear up the details.

Guys,

Maybe by why of a little introduction - I have spent 30 years as a keen student of the orphan subject called "credit". Firstly from behind the desk at a major attorney firm and then in business itself. I have pioneerd the 4 year degree in credit management -drafted the silabus and lobbied till it was recognised - the learnership in debt collection is also my brainchild. For my sins I am an investigator (since 08/08) with the NCR. My spesiality is looking at the debt enforcement practises under the NCA. So don't shoot me - I am only the messenger.

Various declaratory orders are on the table. The most significant that of Gabriel Davel (NRC himself). It has 10 sets of facts that the High Court must look at and see which way the intrepretation will go. Needless to say with the 4 big banks as respondents which ever way the orders are going either the NCR or the banks would appeal.

Just to give you one example - NCR recons that once the "in duplum bucket" is full and the debtor pays a portion of the debt - then the creditor is still not allowed to debit any more section 101 (b) to (g) items. NCR recons once the in duplum max is reached is reached for ever and a day.

Just a point from your discussions - if a debt was incurred before the NCA then the rules of the previous Acts apply except (see transitional provisions in the NCA) that the debtor now needs to get a section 129 letter before you can get any court order AND that debt would be included in debt restructuring IF no legal action in terms of section 130 of the NCA was taken. OPTION - get the legals out before a debtor applies for debt restructuring.

Happy NCA'ing

[Rebel]

Hi,

If my spelling and grammar offend you - remeber I am born and grew up in the states - sorry free states - have no secretary and no spell check - but will try

[IanF]

Spell checker

Hi,

If my spelling and grammar offend you - remeber I am born and grew up in the states - sorry free states - have no secretary and no spell check - but will try

Rebel
You can load a spell checker for your browser just Google it for the browser you are using. Load it and you have it.

[Dave A]

More than happy to have you here, Rebel.

On spelling - I normally leave spelling errors unless they are in the thread title, but I'll be more than happy to play secretary and run spellchecks on your posts if you like.