banks agree to stop credit madness After the SA Reserve Bank governor recently expressed concerns over the current credit ‘madness’ in South Africa, the country’s major banks have taken heed, and on Thursday unveiled a code of conduct to stop forceful overselling of credit.
6 March 2007
The Banking Association’s latest move to create a code of conduct to address the public's concern about being harassed and inconvenienced by people selling credit and about forceful overselling of credit, is a welcome step.
The Banking Association represents the country's five biggest consumer lending banks — Standard Bank, Absa, First National Bank, Nedbank and African Bank.
Cas Coovadia, MD of Banking Association, said the code had been agreed to by the banks after weighing up the concerns of the public against their commitment in terms of the Financial Sector Charter to provide easier access to credit and that the principles of the new code would remain in force as a minimum standard even after the National Credit Act has come into force in June 2007.
"The NCA reflects the minimum legal requirements for an efficient and responsible credit industry. The code is a voluntary effort by the banking industry to set a standard beyond this minimum, to which its members will adhere."
Jacko Maree, chairperson of the Banking Association and group CEO of Standard Bank, pointed out, that the new code did not mean that consumers would no longer receive calls from banks. "Approaches by banks are commonplace around the world. That's competition. But what we're trying to avoid here is abuse, people being misled or forceful overselling by people selling credit," Maree said.
Among the provisions in the code are restrictions on when and who sales people may make contact with to sell credit. Banks will only offer credit to customers whom they have assessed as probably having the ability to repay the credit, and customer contact for credit selling purposes may only be made during certain hours — between 8am and 7pm from Monday to Friday and between 8.30am and 1pm on Saturdays.
"For the avoidance of doubt, banks will tell such customers, upon first contact, that, on the information available to them, the preliminary assessment indicates that they probably qualify for the product that is being offered to them, and that should they accept the offer, they will be taken through the appropriate credit vetting and Financial Intelligence Centre Act (FICA) processes," said Maree.
Bank representatives will also have to advise customers they approach that their calls are about offers for credit, and ask whether the customer would like to continue the conversation.
"If the answer is 'no', they will terminate the conversation immediately," said Maree.
A press conference in Johannesburg on Thursday heard that the principles of the new code would remain in force as a minimum standard even after the National Credit Act comes into force in June.
I-Net Bridge & Sapa, www.business.iafrica.com,