Moody’s warns on debt relief plan

Johannesburg - While giving a nod to the government’s effort to assist over-indebted consumers, Moody’s Investors Service has also cautioned that the moves might have unintended consequences that could be detrimental to credit providers.

The ratings agency said the measures aimed to ensure that all institutions operating in the retail credit market observed the highest standards of market conduct and did not tempt customers to take on unaffordable debt.

Moodys. Credit: REUTERS

However, if the economic situation worsened and social pressure intensified, the government might undertake new legal initiatives to protect borrowers to the detriment of mortgage creditors, it said.

Moody’s noted recently that similar initiatives by European governments to help over-indebted consumers had proven to prolong the recovery of outstanding debt. – Londiwe Buthelezi