24 May 2016

NCR To Get New Powers For Reckless Credit

National Credit Act (NCA), National Credit Regulator (NCR) No Comments

THE days of reckless credit providers going unpunished could be numbered, as the Department of Trade and Industry plans to empower the National Credit Regulator (NCR) to fine them.
Currently, only the National Consumer Tribunal has this power, but it has a backlog of unheard cases, dating back to 2013, and imposed inconsequentially small fines on the companies involved.
A proposal has been submitted to Cabinet to amend legislation to empower the NCR to impose fines, allowing it to conduct proactive investigations and implement a debt-relief programme.
The NCR supports the idea of a debt-relief programme for heavily indebted retrenched workers and has already started engaging with the banks on how they can participate voluntarily in the programme.
The NCR said debt forgiveness programmes were common across the world. Such a programme should be once-off and targeted specifically at retrenched workers who no longer had the ability to continue paying their debts.
National Consumer Tribunal’s CEO noted that the tribunal faced a deluge of debt rearrangement cases that amounted to about 1,600 cases a month since February 2015, giving a total of 19,097 cases for the 2015-16 year, with 27,407 cases forecast for the current year.
Currently, the tribunal has 11,091 matters that are not finalised.
With its new powers of enforcement, the NCR will have the clout to ensure credit providers and lenders comply with the Act, thus affording consumers the necessary protection.
The flip side of this coin, is that creditors and lenders will tighten their lending policies – making access to credit more difficult, according to Adv Kate Thambiran, MD of LUCID Clear Credit.
Thambiran warns that, “consumers will need to manage their personal balance sheets more prudently, if they want to qualify for credit and finance in future.”

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