National Credit Act Amendments and Regulations Gazetted.
During 2014, we saw lots of movement in the National Credit Regulators' sphere with the Credit Amnesty that was published in February 2014 and later implemented in June 2014.
This was followed by the Amendments to the National Credit Act that were published, however, could only be implemented from 13 March 2015.
The regulations were published as a draft towards the end of 2014 and industry had to provide input to the DTI / NCR. More than 30 sets of input were received from stakeholders and this gave way for the final Regulations that were gazetted on the 13th of March 2015 with immediate effect.
13 March 2015 publication
The Gazetted publication brought into effect the National Credit Act Amendments (NCAA) as well as the Regulations that included the new Affordability Assessment Guidelines Ð making South Africa's credit arena one of the most regulated in the world.
The impact of the NCAA and Regulations, is massive for all the stakeholders in the Credit Arena, these are:
From a consumer point of view, these amendments and regulations provide a bigger onus on the consumer to ensure that they can prove that they can afford to repay the instalments when applying for an extension to an existing loan or for a new loan. This also provides more protection to the consumer during the lending process.
Removal of adverse listings upon full payment:
A further impact to the consumer is that once they have paid up their accounts where a historical adverse listing such as slow payer, delinquent and defaulter etc. was loaded, the Credit Provider has to notify the Credit Bureau within 7 days of payment, to remove the adverse listing.
Removal of Judgment flags upon full payment:
Judgments will also now be removed once paid up and the consumer no longer needs to apply for the expensive legal process to acquire a rescission.
Credit Checks for employment purposes:
A very important amendment will also ensure that credit checks for employment purposes are only done and used for positions that require honesty in handling of cash and finances.
2. Credit Providers and Collections
The main items that will impact Credit Providers and Collection houses are as follows:
Additional information now has to be obtained by the Credit Providers from the Consumers on application Ð these include payslips, bank statements and other documentation that can provide proof of income - which will be used to determine the disposable income in the calculation of the affordability assessment.
A recent credit check not older than 7 days for normal credit and not older than 14 days for home loan applications must be used when doing the affordability assessment.
Paid up adverse information:
Once an amount has been paid up where an adverse listing was taken, notification must be sent to the Credit Bureau to remove the listing within 7 days. This would include paid up judgments as well.
Listings may only be submitted to Credit Bureaux when:
- The consumer has been in arrears for 3 consecutive billing cycles
- The consumer has been notified with 20 business days' notice
- No listings if payment is received or if consumer disputes the liability during the notice period.
- No listings on prescribed debt.
Upon payment, the listings must be removed with its next data submission to the bureau and the bureau must remove within 7 days.
The intention of the new regulations is to facilitate the extinction of debt that is older than 3 years where the prescription has not been interrupted. Prescription interrupters include a substantial payment that shows willingness to pay the full amount and a tacit acknowledgement of the debt that can be proved if required. Credit Providers cannot continue to collect, hand over, list or sell debt that has prescribed.
The display periods as per regulation 18, changed as follows:
Employee Checks: Employers can in future only do Credit Checks with payment profile included where the prospective employee has given consent and the position requires honesty in dealing with cash or finances. An additional requirement that has been added is to ensure the Job Description of this position is clearly defined. The permission of the prospective employee must still be obtained in all instances where a credit check is required.
Protection of Personal Information Act Ð Part 1
What is POPIA?
The Protection of Personal Information Act nr 4 of 2013 (POPIA) was passed by parliament on the of 26th November 2013 and is expected to become effective within the next 12 to 18 months. POPIA will significantly impact on the way in which organisations collect, store, process and disseminate Personal Information from and to clients, employees, suppliers and customers.
POPIA is all about the awareness and management of Personal Information of individuals and juristic persons across the enterprise, regardless of whether it is structured or unstructured. If your organisation processes (i.e. collects, receives, records, organises, collates, stores, updates, modifies, retrieves, alters, consults, uses, disseminates, distributes, merges, links, erases or destroys) Personal Information, it is important to consider the implications of POPIA.
Penalties: This Act has been identified as a core Act for most organisations and the penalties for not complying with the POPI Act are high. Organisations that are not fully compliant will face the prospect of some potentially stiff penalties (including fines of up to R10 million or 10 years imprisonment per incident). There is also the risk of potential civil action, resulting in paying out millions in damages to civil claims. In addition to penalties, the reputational damage and loss of customers is an even higher risk.
From our research over the past 5 years, we have noticed a disturbing and dramatic escalation in privacy breach incidents, particularly in the past 12 months. Over and above the privacy breach incidents, South African organisations are part of the global community, and we have a duty to our foreign counterparts to adhere to the Generally Accepted Privacy Principles (GAPP) or face consequences.
Much research into understanding the implications of the POPI Act has been done by some of the best legal minds in the country, and it is evident that the implementation of a POPI framework is not trivial. The POPI Act aims to give effect to the right to privacy as described in the Constitution, by introducing measures to ensure that the Personal Information of individual and juristic persons (data subject) is safeguarded when it is processed by organisations. POPIA also aims to balance the right to privacy against other rights, particularly the right of access to information, and to generally protect important interests, including the free flow of information within and across the borders of South Africa.
What does POPI compliance mean and what will it look like?
To comply with POPIA, there are 8 Principles defined within the POPI Act itself, which must be applied in order to be compliant with the Act. If one of these principles is not complied with an organisation will not be compliant with the Act and might get a fine or there might even be imprisonment. These are well-accepted attributes which are adopted throughout South Africa as the guidelines for a successful POPI implementation.
The 8 Principles are briefly explained in Table 1.
Status of POPIA
As at February 2015 only some of the sections are effective, they are:
At this stage it seems the Information Regulator will be appointed by April 2015. The Regulations are being drafted and there is also an expectation that the regulations will be published by April 2015.
- Definitions (Section 1);
- Establishment, duties and powers of the Information Regulator (Part A of Chapter 5); and
- Right and procedure to draft regulations (Section 112 and 113).
If all the provisions come into effect in April 2015 organisations will have 12 months to comply with the POPI Act. Although this might seem like a long time given to organisations to be ready to comply with the POPI Act, the implementation of POPIA compliant measures in an organisation can take much longer than 12 months.
In our experience organisations are underestimating the implications and work needed to be compliant with the POPI Act.
What should be done?
The following are key actions to be done as soon as possible:
- Appoint an Information officer as required by POPIA;
- Perform a gap analysis to determine the status of the organisation currently in relation to POPIA (As Is);
- Draft a POPIA implementation project plan (To Be);
- Review current Policies and Procedures and design new Policies and procedures where needed;
- Plan and execute awareness campaigns;
- Identify the areas in the organisation where Personal Information is processed;
- Design processes to ensure compliance with the POPI Act with specific focus on the 8 principles as depicted in the POPI Act;
- Review, monitor and audit these processes on a regular basis; and
- Report on a regular basis to EXCO and the Board on the status and implementation of the POPI Act.
About Baitseanape Management Consulting (Pty) Ltd
Baitseanape Management Consulting (BMC) is a BEE Level 3 company and some of our clients include Harmony Gold, Rand Mutual Assurance and the National Credit Regulator.
BMC has dedicated considerable time and resources to scrutinize POPIA over the past years. Our team has the expertise to assist you with the implementation of POPIA. We are currently assisting many of our clients with the implementation of POPIA.
Do not hesitate to contact us if you need any assistance:
Baitseanape Management Consulting
Website: www.bmcsa.co.za | sales email:
|Office telephone number: 011 760 6662
Abel Pienaar | 082 851 9541 |
Lynnette Smith | 082 822 2659 |
CPB is proud to announce that we have received a Certificate of Compliance on Protection of Personal Information Act 4 of 2013 (POPIA) certifying that CPB is compliant with the requirements of POPIA. The certificate is available on the CPB website.
Consumer Education for the month of April:
Skipped a credit instalment or two? Maybe you should check your post
Are you a party to a loan agreement or a credit account thinking that the contact details you insert are a mere formality? Do you skip a payment or two every so often and circumvent the letters of demand or legal notices by ignoring the registered post sent to you? If so you may wish to reconsider your approach. With debt, ignorance is never bliss and the recent case of Kubyana v Standard Bank of South Africa Ltd (CC) clearly illustrates that.
This latest court case, addressing the manner in which credit providers are required to inform consumers of their payment default, drastically curtails the ability of the consumer to claim ignorance of such a notice. Mr Kubyana was one such consumer whom Standard Bank sent a notice duly informing him that he was in default of his credit agreement with them. Mr Kubyana failed to collect his registered post. Upon the registered postal notice being returned to Standard Bank, the financial institution issued summons against Mr Kubyana. Mr Kubyana, however, responded to the summons with a special plea averring that Standard Bank had not discharged all its obligations in terms of section 129 of the National Credit Act 34 of 2005 (NCA).
According to the NCA, the obligations resting on the credit provider requires the credit provider to, at a minimum, notify the consumer of his default. However, the scope of the notification process is mistakenly presumed to be more onerous on the part of the credit provider than what is in fact required - and many consumers think that they can evade the attempts of the credit provider to reach them. Evidencing the inaccuracy of this presumption, the North Gauteng High Court held that, due to Mr Kubyana being unable to provide a suitable explanation for his failure to collect his registered post, Standard Bank was under no obligation to employ additional means to ensure that Mr Kubyana received his notice.
Mr Kubyana sought to appeal the ruling in favour of Standard Bank to the Constitutional Court, arguing that Standard Bank was required to fulfill its obligations in terms of the NCA before instituting legal proceedings against a consumer. In the Constitutional Court, Mr Kubyana relied on the older case of Sebola and Another v Standard Bank of South Africa Ltd and Another where it was held that proper delivery of a notice would not be done (as required by the NCA) in the event of the notice being sent by registered post (with proof thereof) and such notice being returned to the credit provider as unclaimed. The two questions before the Constitutional Court were the following:
From Mr Kubyana's factual situation, the Court held that Standard Bank was under no obligation to bring the notice to the attention of the consumer, nor did it have to provide for serving it in person. If the NCA required these conditions to be fulfilled for proper delivery of such notice, the NCA would have expressly provided for such.
- What is required of a credit provider to ensure that notice of the default reached the consumer?
- What must the credit provider prove in order to satisfy the court that it has sufficiently discharged its obligations?
Therefore, the Constitutional Court determined that it is sufficient if the notice is reduced to writing and made available to the consumer at his nominated address, which primarily translates into delivery by registered post to the correct post office. If the consumer fails to respond to the notice, the credit provider is allowed to proceed with legal steps against the consumer.
What distinguishes the Sebola case from the facts of Mr Kubyana's is that the meaning of the NCA was wrongly interpreted by Mr Kubyana. Sebola was successful in challenging the delivery of the notice as it was sent to the wrong post office and therefore it never reached Sebola, unlike Mr Kubyana who merely refrained from collecting his registered post correctly sent to him.
Although defaulting on payments is not advisable, it could happen for many reasons. Before the situation gets out of hand, collect your post. If the long arm of the law is threatening, seek out a legal advisor to assist you with options of debt counselling or appropriate legal advice in the face of pending legal proceedings.
For more information contact
Henk Cilliers of Cilliers & Reynders inc.
106 Jean Avenue, Doringkloof, Centurion,
South Africa, 0040
T: +27 012 667 2405 | F: +27 012 667 4067 |
Do not fall victim to online credit scams
'Have you been blacklisted?' Chances are you've seen many adverts asking you this question, but rest assured that the answer is always 'no'.
There is no such thing as a blacklist, says Jeannine Naud-Viljoen, executive manager of the Credit Bureau Association (CBA). 'There are a number of companies that claim to be able to clear a consumer's credit report or remove their name from a "blacklist'. This is, however false advertising and is intended to mislead consumers. These services are also often advertised at exorbitant costs.'
The advertisements in question also often claim that consumers can qualify for credit despite having a negative credit report, but in actual fact, many of them purely supply high-interest loans to individuals with poor credit ratings.
In reality, all credit active consumers in South Africa have a credit profile and the credit bureaus therefore display both positive and negative information. This means that all information on how well (or poorly) you pay your accounts is reflected on your credit report.
'The information that is displayed on your profile is linked to your payment behaviour and how well you manage your obligations. A third party cannot alter this information. The company that you have an account or a loan with supplies information on how well you pay your accounts to the credit bureau. If you have any negative information reflected on your profile it is best to firstly understand where the problems are and to then make contact with bank or retailer to make a payment arrangement,' says Naud-Viljoen.
Gumtree is fighting back
Gumtree has recently met with the CBA to combat the growing problem of misleading or fraudulent ads appearing on various classifieds that claim to remove individuals from a blacklist or provide credit. According to Claire Cobbledick, head of Marketing for Gumtree South Africa, the site has implemented strict measures to ensure that their customers are protected. 'Safety is of paramount importance. We took immediate action to block keywords and advertisements pertaining to blacklisting and encourage our community to report any ads that make such claims immediately. We are committed to working with organisations such as the Credit Bureau Association to ensure that we are protecting our customers and keeping their best interests in mind.'
Naud-Viljoen says that cooperation from online classifieds is vitally important, but that consumers should also be aware of the facts surrounding credit. It is important for classifieds to ensure that they do not publish advertisements that mislead or defraud the public.
'To this extent Gumtree has gone to great lengths to implement processes to scan and verify that advertisements that do not meet these requirements are not published,' she states.
'Consumers need to make sure that they understand their rights and that they do not engage with companies that seem doubtful or untrustworthy. Companies who advertise that you will qualify for credit despite having a negative credit bureau report are most probably granting those loans recklessly and if you are already over-indebted or in arrears with some of your loans, you are just worsening your financial position. The National Credit Act prescribes that all credit providers must do a proper affordability assessment (which includes an analysis of your income and your expenditure as well as all your other financial obligations) before they can grant credit. If they are not doing this, they are not acting in your best interest.'
Naud-Viljoen stressed that there are numerous reputable lenders, but that due caution is necessary.
Tips for consumers
Naud-Viljoen's advice for consumers:
Never give your ID or bank card to someone to keep as security for a loan.
- Before taking a loan, always verify that the lender is registered with the National Credit Regulator (NCR). Check the lender's website and the website of the NCR for their registration number.
- Ask for references and talk to other consumers who have used their services to verify their experience.
- Never deposit money into a bank account or give someone cash without making sure that the service is legitimate.
- When in doubt reach out for professional advice Ð contact the credit provider or credit bureau directly to understand your rights.
Thankfully, Naud-Viljoen says, that a negative credit report will not haunt you for life. 'Following the "credit amnesty' all paid up judgments are now removed as soon as you can show that you have settled the debt. If that does not happen for whatsoever reason, the consumer can dispute the information with the credit bureau and provide it with proof that you have paid up the judgment. The bureau must investigate the matter and if it is paid up, it will be removed. This is done at no cost to the consumer. It also means that you no longer need to make application to court to have a judgment rescinded.' She also encourages consumers to make use of their opportunity to receive one free credit report from each registered credit bureau once a year. She says that 'by knowing what your credit report looks like, you are able to take action where you have accounts with negative classifications and if you have a good report you can apply for credit with confidence'. Your credit report also shows who has made enquiries on your profile and helps to prevent fraud using your ID.
Cobbledick cautions all consumers to be extremely vigilant and careful before agreeing to any loan or offer of credit. 'These offers may seem like a lifeline but there are plenty of ways to earn extra money without getting into debt, especially considering the risks. Selling unwanted goods, applying for part-time and weekend jobs, advertising your skills can all be done for free on Gumtree. Obtain a copy of your credit report, contact the credit provider you are indebted to and devise a realistic payment plan. If you do choose to obtain a loan, do so safely.'
Posted by IT-Online
Article supplied by the CBA