REGULATIONS
National Credit
Amendment
Act to help
South Africans
settle debt
Yusuf Dukander
T
he National Credit
Amendment Act 2014, which
was gazetted in May, is aimed
at improving the effectiveness
of debt counselling and thereby
help many South Africans
to settle their debt, while also aiding in
preventing the reckless granting of credit by
credit providers.
At the South African Institute of Chartered
Accountants (SAICA), we’re encouraging
people to familiarise themselves with the new
amendments, which provide for the alteration
of the governance structures within the
National Credit Regulator (NCR), to provide
for the registration of payment distribution
agents, and to tighten measures relating to
debt counsellors and the conduct of their
practices.
The purpose of the National Credit Act is to
promote and advance the social and economic
welfare of consumers, by promoting a fair and
transparent credit industry and alleviating
consumers from over-indebtedness.
Choosing the best credit facility or credit
granting may seem simple, but it is important
to understand the applicability of the Act,
which applies to all written credit agreements
between parties at arm’s length and concluded
within South Africa. The Act was introduced
to facilitate new and protective rights for
consumers for all type of credit agreements.
36
The National Credit Amendment Act 2014 encourages
credit providers to be more responsible, and in so
doing, helps South Africans keep over-indebtedness
at bay. By Yusuf Dukander
Credit facility, credit guarantees and credit
transactions all fall within the ambit of the Act.
The collapse of African Bank Investments
Limited (ABIL) has drawn widespread
criticism from the public, as well as
shareholders, lenders and the regulatory
authorities.
Was the collapse due to poor risk
management, or bad luck? Were there obvious
errors of judgment, or was it simply blind
optimism? Was there a lack of oversight on key
pieces of regulation and legislation?
The Act was initially assented in 2005.
It contributed to South Africa’s financial
institutions, and specifically banks and credit
providers, to better withstand the 2008 global
financial crisis when global markets were
in turmoil. While lending by banks and
credit providers remains at the heartbeat of
stimulating our economy, consumers can also
play a social and economically responsible
role in curbing debt.
THINGS TO KEEP IN MIND FOR CREDIT
PROVIDERS
The National Credit Amendment Act is seen
as a firm step by government to tighten up
governance, accountability and the operations
within the NCR. It also serves as a measure
to allow consumers to make more informed
decisions before buying goods and services
on credit. In addition, it places greater
responsibility on credit providers to refuse
consumers credit if they cannot afford it.
Examples of credit agreements which fall
within the Act include:
• Credit facility – credit and cheque cards,
overdrawn cheque account and revolving
credit, credit guarantees, suretyships;
• Credit transactions – pawn or discount
transaction, incidental credit agreement,
instalment agreement, mortgage agreement
or loan, lease.
What is exempted under the Act? If the credit
provider has less than 100 agreements or the
total principal debt is less than R500 000.
OTHER QUICK FACTS:
• A credit provider must submit annual
financial statements, including the auditor
or accounting officer’s report, to the NCR
within six months after the credit provider’s
financial year-end.
• A credit provider must submit an annual
financial and operational return in Form
40 to the NCR within six months after the
registered credit provider’s year-end.
• A credit provider must get an accounting
officer or auditor to conduct an assurance
engagement in terms of Regulation 68
of the Act.
Yusuf Dukander is the Project Director for
Financial Services at SAICA.
BANKERSA | Edition 12
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2014/12/18 10:09 AM