The Portfolio Committee on Trade and Industry has been briefed on the proposed National Credit Amendment Bill, which amongst others seeks to enhance ways to deal with reckless lending accompanied by effective penalties for such lenders. The Department of Trade and Industry made a presentation on key legislative challenges that are currently in the Act.
Mr. Bheki Radebe, acting Chairperson of the Committee, indicated that although credit is the oxygen of the economy, Members of Parliament needed to protect consumers.
The Department wants to tighten the requirements for people who may practice as debt counsellors. Mr Andisa Potwana, Director: Consumer Law and Policy, Policy and Legislation Unit said amendments would not only include minimum standards in terms of qualifications but also who would be deemed "fit and proper" persons to operate as debt counsellors.
Committee Member, Mr. Geordin Hill-Lewis, said he was concerned that the issue of life insurance to cover credit (called credit life) is not covered in the draft proposals. "Customers are being ripped off by credit life being added to every agreement they enter into."
Mr. Xithangoma Mabasa, who also serves on the Committee, said the personal details of consumers who had paid up their debts should automatically be removed from the credit bureau list.
It should not be a question of consumers having to apply for such action to be taken, he said. Mr Potwana said the Department wanted to have names of consumers removed from "black lists", within seven days of debt being repaid in full.
Another Committee Member, Mr Ndabakayise Gcwabaza, said the high interest rate that consumers were expected to pay should be addressed.
Mr Hill-Lewis also raised the issue of illegal credit providers lending money to over-indebted consumers Mr Potwana said the Department wanted to have names of consumers removed from "black lists" within seven days of paying debt in full.
The current penalty of 12 months for such loan sharks was way too little as "they were ruining people's lives." He suggested a 10-year jail term instead.
Mr Mabasa agreed penalties should be heavy but wanted to know if South Africa had the capacity to police the Act. "This is part of what brought us to (the disastrous events of) Marikana," he said.
Committee Member Mr Graham McIntosh said although the Committee did not want people to be exploited, it also did not want to drive unscrupulous lenders further underground.
The National Credit Regulator said in response that the issue of the amounts sanctioned in terms of garnishee orders were being address as they wanted to put a limit on orders being deducted from salaries.
Mr Radebe said the Bill has not yet been tabled in Parliament and as soon as this happens the Committee will give its fullest attention to it, as "credit affects every South African."