credit act "won't erase debt"
19 February 2007
The introduction of the National Credit Act will not erase debt entered into before June 2007 — when the act comes into effect, and provisions such as reckless lending will not apply to transactions made before June, but will apply to transactions granted afterwards, Peter Setou, Senior Manager: Education and Strategy at the National Credit Regulator (NCR) said on Thursday.
"We should also note that debt counselling is aimed at assisting consumers who are over-indebted and to reschedule or restructure the debt to manageable levels and is not about debt pardoning," he said.
From 1 June 2007, debt counselling services will be available to consumers who are unable to honour their debt repayments on time.
Setou said that the National Credit Act was preceded by extensive research and rigorous consultations with various stakeholders and role-players, including benchmarking with international best practices. The act is aimed at regulating the credit granting industry and credit bureaux, curbing reckless lending and ensuring that consumers are protected from unfair business practices.
He said: "This is a comprehensive piece of legislation which will promote responsible lending and prohibit reckless credit granting. It further provides for a consistent enforcement framework on consumer credit.
Other key features of the act are to ensure that interest and fees are regulated and the advertising and marketing for credit must contain prescribed information on the cost of credit.
According to Setou, the Credit Bureaux cannot register as debt counsellors. "The logic is very clear here since there is potential for a conflict of interest," he said.
With regard to debt counsellors, Setou said the act is very clear when it comes to the requirement for registration of debt counsellors, including the training requirements.
The NCR has processed the training material and accredited eight training service providers and the training for debt counsellors has commenced.
"The credit regulator has constructive engagement with banks, retailers and other credit providers on an ongoing basis to ensure that clarity is provided where there are issues of interpretation," said Setou, adding that the feedback received thus far has been "very positive".