Consumers not well informed about credit bill

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The Department of Trade and Industry (dti) issued numerous statements in the past year, setting the record straight for consumers with impaired records who thought their debts would vanish on April 1 that this would not happen.

While many people understood they had to continue paying their outstanding debt, I still get alarmed at the number of people who are under the impression that banks will no longer have any adverse credit information against their names.

The National Credit Amendment Bill states that all credit-active consumers’ payment profiles will still be kept by the credit bureaus and accessible to lenders. These profiles reflect how a consumer pays their accounts each month and what the installment value, or in the case of a lease agreement, what the rental value is.

What people seem to have missed is that credit providers are not required to remove adverse information that would be deleted from credit bureaus from their databases.

It appears that consumers are not well informed that information like debt review data, administration orders and rehabilitation notices will not go away because these are excluded from the amnesty.

So has the government done enough to educate the affected consumers? Probably not! In 2007, the government implemented credit amnesty, but credit bureaus say almost half of the people who were granted such amnesty soon found themselves back on the blacklists. The dti says the flaw with the process was that consumers had to take certain steps to benefit from it.

With the National Credit Amendment Bill, do consumers know that their lenders have to submit proof of paid-up debt to the credit bureaus for the adverse information to be removed

Educating consumers a little more on this process will go a long way to ensuring that the failures of the 2007 credit amnesty are not repeated.

Vehicle sales

The latest new car sales figures paint a sobering picture of where the economy might be headed, if the Reserve Bank’s monetary policy committee decides to hike interest rates again this year.

New car sales declined last month by 2.2 percent to 36 798 units from the 37 612 units sold the previous year. Sales for the first quarter of the year of 109 237 units are 5 percent lower than the corresponding quarter last year.

Kamilla Kaplan at Investec said this was the sixth consecutive month of contraction in passenger vehicle sales, which was partially reflective of the slowdown in household installment credit sales and leasing finance credit categories, depressed consumer confidence and the pick-up in new vehicle inflation. “Based on the past relationship, the growth performance of passenger vehicle sales is consistent with a further slowing of household expenditure growth in the coming quarters.”

Consumer demand and expenditure ultimately drive economic activity and growth. The slower annual import growth relative to export growth, which resulted in South Africa’s trade balance registering a surprising surplus of R1.7 billion in February compared with a deficit previously and market expectations of a R3.5bn deficit were also probably influenced by expectations of lower domestic demand.

Exports of new vehicles manufactured in South Africa dropped last month by 11 percent to 24 665 vehicles from the 27 782 vehicles exported in March last year.

The National Association of Automobile Manufacturers of SA attributed this largely to the lack of exports by Mercedes-Benz as it prepared for the commencement of its C-Class export programme from the middle of this year.

Although passenger and light commercial vehicles account for the bulk of the exports, medium, heavy and extra heavy commercial vehicle and bus exports were substantially lower year on year in the first quarter.

Steven Barker, the head of secured lending at Standard Bank, said there was pressure on vehicle sales globally, which was negative for South Africa’s ability to export.

Edited by Peter DeIonno. With contributions from Londiwe Buthelezi and Roy Cokayne.


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