Q: Does the new NCA supplement or replace the Debt Collection Act?
A: The NCA should be seen as supplementary. The regulations relating to Debt Collection fees, for example, are not affected by the NCA.

Q: How is “plain” language defined?
A: Legal terms and those in Latin should be avoided

Q: If a provider does not have to register is he only excluded from the interest rate restrictions?
A: Although a provider may be small enough not to register, he will still be governed by all the provisions of the Act – except registration and reporting to the NCR

Q: Reckless lending – what if the consumer applies for a number of loans/ credit on the same day?
A: As the provider you may not know this. A provider can only be held responsible for what can be reasonably expected to be known – which excludes circumstances where the consumer deliberately chose to mislead him or her.

Q: Are there thresholds for reckless lending?
A: Nothing explicit. The NCA associates reckless lending with over-indebtedness - which will rely on the assessment of providers.

Q: Interest rate hikes could cause a consumer to become over-indebted, however, the last loan could have been responsible lending- what happens in this situation?
A: It is possible that a change in individual circumstance or an unexpected hike in interest rates could cause a consumer to become over-indebted and distressed. In this case, no provider may be deemed to have been reckless, but they are still likely to be affected by debt-rescheduling.

Q: Is the 5-day quote period the same as a ‘cooling off’ period?
A: No. It refers only to the validity of the quote. If a consumer decides on the basis of the quote to accept the credit immediately, there is no compulsory cooling-off period

Q: How does one show products which have imbedded insurance?
A: Insurance charges must be explicitly disclosed

Q: How often must the provider evaluate - on every credit application or at the beginning of the term agreement?
A: The provider must assess every credit application, with the understanding that this assessment applies to the term of the loan. An extension will require a re-assessment.

Q: Does the monthly fee include statements and mailing and other transaction fees, e.g. debit order fee?
A: Yes. It includes all monthly fees associated with servicing the loan

Q: Will the mortgage evaluation fee be included in the initiation fee?
A: Yes. It includes all fees associated with initiating the loan

Q: How does credit life insurance work?
A: This may be charged on a monthly basis or annual basis – but may not be amortized across the entire loan term.

Q: Will VAT be charged?
A: On fees, yes.

Q: Is the provider entitled to change interest rates – as in, say, a variable interest rate mortgage?
A: Yes, the Act allows for this, although, clearly this needs to be disclosed to the consumer before the agreement is signed informed.

Q: Do the service fees include debt collection costs?
A: No. These are separate - and not set by the NCA regulations

Q: Can the consumer dispute information with the credit bureaux directly?
A: Yes.

Q: Will there be a register of people who are debt counselors?
A: Yes. All debt counselors must be registered

Q: Does debt counseling take over from administration orders?
A: The NCA does not address admin orders directly, but section 130 (3) of the Act has relevance. Debt counseling may be seen as a parallel - and hopefully over time - better route than admin orders.

Q: Who pays the debt counselor? How can debt counselors be deemed neutral if they are outsourced by the provider?
A: The consumer being assessed will pay a fee. Debt counselors may not be "outsourced" by providers - but they can be "outsourced" by employers willing to help their employees.

Q: Do the regulations imply that a person must go through debt counseling before they go the magistrate?
A: It is not a compulsory stage, although it is possible a magistrate may refer a case to a debt counselor

Q: Will the Tribunal automatically enforce the counselor’s recommendations? Is there a right to representation?
A: The Tribunal will hear representation and will evaluate the recommendations of the debt counsellor.

Q: Does this apply to motor leases?
A: Yes. Only leases of fixed property are excluded.

Q: Does this apply to staff loans?
A: Yes. Could still be seen as reckless, for example, if make no assessment of borrower (employee)

Q: Does the Act apply to incidental credit such as cellphone, electricity interest?
A: There is limited application of the Act to incidental credit - see section 5 of the Act


(www.bankseta.org.za)