In November 2017, the Draft National Credit Amendment Bill, 2018 was published by The Portfolio Committee on Trade and Industry, along with the Bill’s explanatory memorandum. Promulgation is expected soon which will effectively make the Bill law.
When public hearings took place, many concerns were raised, in particular whether or not the Bill would withstand a constitutional challenge. Some felt that if the Bill were to be enacted in its present form, it would amount to arbitrary deprivation of property, which is not permitted in terms of Section 25 of the Constitution. Another concern is that the Bill does not appear to provide relief to the over-indebted consumers that stand to qualify in terms of the amendments.
It is apparent from the Bill that the following amendments will be made to the current legislation:
- The National Credit Act, 2005, will be amended to provide for debt intervention;
- The evaluation and referral of debt intervention applications and the suspension of agreements considered to be reckless as part of the enforcement functions of the National Credit Regulator will be included;
- The consideration of a referral as a function of the Tribunal will be included and
- The Minister will be permitted to prescribe debt intervention.
The amendments will provide for over-indebted consumers who will qualify (who at 24 November 2017, earned less than R7 500.00 per month, and who owed less than R50 000.00 in unsecured debt relating to Credit Agreements) to make an Application to the National Credit Regulator for debt intervention.
The Bill has made provision for a second debt intervention aspect, in which the Minister of Trade and Industry may prescribe debt intervention measurements to alleviate household debt that constitutes a significant exogenous shock, which caused widespread job losses. The criteria for this relief are that the cause for debt must be the result of a regional natural disaster or similar incident.
However, intervention by the Minister will only be applicable to indigent persons with an income of less than R7500, which includes disabled persons, minors heading a household, women heading a household, and persons who suffered an unforeseen loss of income in a sector identified by the Minister.
The amendments to the National Credit Act, will possibly have far reaching consequences for credit providers, as credit being provided to consumers will in turn become more expensive, leading to consumers being unable to afford credit.