The National Credit Regulator (NCR) is in hot water over the perception that it is not doing enough to bring to book transgressors of the National Credit Act (NCA).
Members of Parliament’s portfolio committee on trade and industry, which has oversight over the NCR, have called on the regulator to file the following documents with the committee by April 14:
* A list of cases referred by the NCR to the National Consumer Tribunal (NCT) since its establishment, but not yet processed or finalised, including the status of these matters.
* A list of cases referred by the NCR to the NCT that have been concluded by the tribunal and the corresponding judgments.
* A list of cases referred by the NCR to the South African Police Service and the National Prosecution Authority (NPA) for criminal prosecution.
* The number of credit providers that have been convicted of illegal credit practices, such as withholding or confiscating identity documents, South African Social Security Agency (Sassa) cards or bank cards of borrowers. The committee wants to know the conviction rate of criminal cases.
* A report on matters that require inter-departmental coordination to give full effect to the Act and/or to address related concerns.
Geordin Hill-Lewis, a Democratic Alliance MP on the committee, says the “grilling” followed a briefing by Nomsa Motshegare, the chief executive of the NCR, on the regulator’s performance report for the quarter ending December 2015 and the NCR’s three-year strategic plan to 2020/21.
“I asked why we never hear any feedback from the regulator about the consequences for transgressors of the Act. For example, we hear that the Lewis Group is paying consumers back R67 million for selling loss-of-employment insurance to pensioners and self-employed or unemployed people. It’s great that consumers are being refunded, but Lewis committed a crime. Where are the consequences? What message are we putting out in this country? That if you get caught selling dagga you will get sent to jail, but if you steal millions from poor consumers, you’ll get away with paying a fine? There is this impression that there are no consequences for transgressors. Why is that?”
In the discussion after the NCR’s briefing to the committee, Hill-Lewis also raised the issue of African Bank.
“Three years after the investigation into African Bank there have been no repercussions for the executive team, who resigned long ago and are living it up and selling their houses for millions – houses built with the proceeds of the illegal banking practices of African Bank. These executives must be held personally accountable for their actions. The same is true of the Lewis Group and of some of the other cases that have been brought before the tribunal,” he says.
Hill-Lewis proposed that the tribunal be called to Parliament to explain to the committee why the African Bank case had yet to be resolved, what progress was being made on it and others, and on the criminal prosecution of the relevant people.
Advocate Anton Alberts, the Freedom Front Plus’s member on the committee, also asked for the tribunal to report to the committee on matters placed before it that had not been attended to properly. He said the NCT had changed its procedures without informing any of the agencies that work with them, including the National Consumer Commission, and when these entities lodged complaints, they were told that they had not followed the correct procedure for lodging a complaint. However, the procedures the NCT now follows seem to be in reverse order to the formal civil procedure rules, and the new procedural rules therefore do not make any sense from a legal perspective.
In her briefing, Motshegare told the committee that the regulator had conducted investigations into:
* The sale of retrenchment and occupational disability cover to pensioners and consumers who receive social grants;
* Over-charging of credit life insurance;
* Reckless lending;
* Obtaining judgments in the incorrect jurisdiction;
* Overcharging of fees; and
* Misleading advertisements.
She said enforcement action by the regulator included the following:
* The referral of 44 matters to the NCT, including cases of garnishee orders;
* Refunding of R67 million to consumers who were overcharged for insurance products;
* Fines to the amount of R4.4 million imposed on nine credit providers; and
* ID books, Sassa cards and bank cards seized, and the arrest of several credit providers in the Western Cape.
In response, Nicolaas Koornhof, an ANC party member of the committee, asked the regulator if charges had been laid against credit providers that did not comply with the Act, what these charges were, and whether the credit providers’ licences had been revoked.
Lesiba Mashapa, the company secretary for the NCR, said this week that the perception that the NCR was not doing enough was “unfortunate”, given the work that it has already done and is doing to enforce the NCA and reduce the cost of credit for consumers,
“The NCR has been rigorously enforcing the NCA and monitoring credit providers’ compliance on reckless lending. These efforts have been supplemented by changes to the NCA to simplify the requirements for affordability assessment, which culminated in the affordability assessment regulations. A lot more is being done currently to reduce the cost of credit for consumers. The new interest rates regulations will come into effect on May 6 and the draft credit life insurance regulations are being finalised for implementation,” Mashapa said.
PROBE INTO ‘DEBT FORGIVENESS’
Parliament’s portfolio committee on trade and industry has asked the National Credit Regulator (NCR) to do secondary research on “debt forgiveness” as a measure to ease the debt burden of low-income earners.
The regulator has until April 15 to report back to Parliament on the possible impact of debt forgiveness – a euphemism for an amnesty or writing-off of debt – on poor borrowers.
The issue came up during a recent briefing by Nomsa Motshegare, the chief executive of the NCR, who told members of Parliament that 10 million of South Africa’s 23.5 million credit-active consumers were not in good standing with their creditors. It was a priority of the NCR to consider how it could ease the burden of debt on consumers, especially in a context of escalating electricity, fuel and food prices. Many consumers were struggling, even though they were trying their best to repay their loans, she said.
Other countries had instituted debt forgiveness programmes for specific groups of people, but the NCR would need to do research to understand how those programmes were introduced and whether or not they had been effective.
Joanmariae Fubbs, the chairperson of the committee, said credit was closely linked to some of the challenges faced by low-income earners and these challenges stemmed from a major wage gap. Considerations such as this provided the impetus for debt forgiveness, rather than encouraging irresponsible behaviour in consumers, she said.
But Geordin Hill-Lewis, a Democratic Alliance party member of the committee, says debt forgiveness, which was mooted by ANC members of the committee, was a pre-election ploy by the ruling party to win favour with consumers.