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Board of Directors …

Chair: Adv. P. TlakulaDeputy Chair: M Setiloane

Designated MembersS. Luka (Social Development)N. Mashiya (Finance)A. Osman (Housing)F. Sibanda (Trade and Industry)

Other MembersY. RadinkuC. GloverM. MalekaM. van SchalkwykT. Store

Committees (& chairpersons) Remuneration committee (C. Glover) Policy & strategy committee (Y. Radinku) Audit & risk committee (T. Ramano)

(independent)

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Registration …

3,968 credit providers with 19, 574 branches were provisionally registered by 31 March 2007.

8 credit bureaux were fully registered

51 debt counsellors had submitted applications for registration (debt counselling sections became effective on 1 June 2007)

Credit providers as at 31 March 2007

Category Number

Consumer debt ≥ R15 billion 6

Consumer debt ≥ R5 bn < R15 bn 11

Consumer debt ≥ R1 bn < R5 Billion 26

Consumer debt ≥ R100 million < R1 Bn 99

Consumer debt ≥ R5 m < R100 m 191

Consumer debt ≥ R1 m < R5 m 293

Consumer debt ≥ R1 m 3,342

Total as at 31 March 3,968

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Consumer education & awareness …

Creating a high level of awareness of specific consumer rights, prior to the effective date of relevant sections of the Act, would have been counter-productive

We therefore focused on:- incremental awareness on the general content of

the Act; cautionary messages in relation to over-

indebtedness; rights in respect of credit bureau information

Consumer education & industry workshops

128 consumer education workshops 32 workshops and presentations on the Act to

industry 37 ‘educational adverts’ were placed 185 articles on the Act in the print media 170 radio and 25 tv interviews

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Credit Bureaux & credit information …

Registration 8 registered, 3 rejected & withdrawn, 5

awaiting registration

Consumers access to credit reports 60,000 free credit reports between Sept

2006 & March 2007 30,815 reports @ prescribed R20

S73 regulations – ‘data cleansing’ Regulations published 1 Dec 2006 Specified information had to be removed

by 1 June 2007 Independent audit on each bureau by 31

August

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Research & public information …

Key findings on growth in credit extension:-

Household credit (by banks) increased by R391 billion over 4 years, i.e. 135% growth;

Bulk of this growth is mortgages, which grew by R270 billion over the period

Credit cards also grew considerably, but amounts relatively small … however, an important contributor to debt stress

Consumer credit extension grew faster than household consumption, GDP or growth in formal employment

Important structural changes in the consumer credit market

Banks’ credit criteria becoming more inclusive Credit card income thresholds lower, access to

cheaper source of credit than micro loans or furniture finance for low income individuals

… but create new risks for debt stress(Consumer credit by banks, per FEASibility Report)

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Training of Magistrates …

Magistrates deal with approximately 65,000 debt related judgments p.m.

National Credit Act is a radical departure from the previous legislation: huge demands on the magistrates who have to interpret and apply it in the courts

Justice College developed a training manual & implemented a training programme for magistrates; expect 700+ magistrates to undergo training during 2007

Invaluable contribution to the successful implementation of the National Credit Act !

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Debt Counselling …

Huge effort in preparing for the implementation of debt counselling … but it remains the biggest challenge

Initiatives :- Training manual, training aids & 8 accredited training service

providers = providing professional training in all parts of SA Specialist support to registered debt counsellors Debt counselling software + procedure manual, available free

of charge for 6 months Internet-based database on debt counselling cases Proposals for changes to Magistrates Court Act & NCA to

improve the consistency between Acts & address areas of concern

“… effective implementation of debt counselling depends upon goodwill & co-operation of a number of stakeholders, including credit providers, credit bureaux & magistrate’s courts…”

Case of over-indebtedness:-

Mr. X, 27 year old, earning R8,450 Monthly commitments = R17,500Living expenses R2,150.2 mortgage bonds = R776,020 (7,948pm), Vehicle finance = R182,579 (2,812pm), 2 credit cards = R13,965 6 retail accounts = R28,200. Investment policy, & insurance = R1,357 pm.4 further clothing accounts + cell phone

Net income of R6,300, to cover monthly financial commitments

of R17,500 = shortfall of R11,200.

…living beyond his means = a case of reckless lending &

irresponsible borrowing

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Finance …

Surplus of R141,981 for 10 mnts to 31 March’07

DTI transfers = 83% of income Registration fees = 13% of income Latter will increases significantly as

registrations are finalised

Unqualified audit opinion, certain issues as ‘emphasis of matter’

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Human Resources …

Employment Equity is a fundamental principle and our staff is representative of the community we serve.

As at 31 March: 51 permanent employees, 8 contract employees, 10 vacancies; (56% of our staff female, 82% of the staff black South Africans, 30% of management team female, 60% black South Africans)

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Developments since 1 June ?

1. S73: Credit bureaux data removal & audits

2. Debt Counsellors

3. Pre-agreement quotes translated, on web site

4. Investigations & monitoring of compliance

5. Impact of Act: Reduction in the volume of credit ? Increased declines, particular mortgages & motor vehicles ?

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Thank You !

www.ncr.org.za