By Hennie Pretorius, journalist, Justmoney
The Department of Trade and Industry (dti) released Draft National Credit Regulations for Affordability Assessments for public comment on 1 August 2014. The deadline for comment is 31 August 2014.
Deputy director general Zodwa Ntuli of the dti blames reckless lending as one of the key factors to over-indebtedness: “The introduction of the affordability assessment regulations is necessary and urgent to address the prevalence of reckless lending in South Africa,” said Ntuli.
According to Ntuli, before credit providers can approve credit applications, they need to:
• Determine the financial means and prospects of a consumer.
• Determine the consumers existing financial obligations.
• Review debt repayment history of the consumer.
• Avoid ‘double counting’ by not including statutory deductions.
• Disclose all applicable costs of credit.
Current debt to be taken into account
In addition to the above, all current debt needs to be taken into account, including monthly debt repayment obligations. Ntuli was especially enthusiastic regarding maintenance obligations being taken into account during the credit application process.
“The regulations create a ‘buffer’ which will ensure that households remain with money to put essentials on the table on a month to month basis after repaying their debts,” said Ntuli.
Proposed regulations are not limited to affordability assessments
In addition to proposed affordability assessment criteria, functions of Payment Distribution Agencies (PDA’s), including training for PDA’s, credit providers and debt counsellors in the area of accounting has been proposed. Various other parties mentioned include business management, risk management and fraud prevention.
“The success of the affordability assessment hinges on both consumers and credit providers to be honest and responsible,” said Ntuli.
How to make your voice heard
Interested parties can submit their comments in writing to:
• Director-General, Department of Trade and Industry, Private Bag x84, Pretoria, 0001.
Or deliver them by hand to:
• 77 Meintjies Street, Block D, 1st Floor, Sunnyside, Pretoria.
Comments can also be emailed to the dti deputy director of consumer law and policy Klaas Mokaba at nca@thedti.gov.za, no later than Friday, 28 June 2013.
To view the Draft Credit Amendment Bill click here.