Consumer And Corporate Regulation Division

1. Consumer And Corporate Regulation Division Presentation to Corporate Rebels: How to ensure sound Credit Law Reform. 15 OCTOBER 2014

2. Presenter SiphamandlaKumkani Director : Credit Law and Policy Department of Trade and Industry

3. Policy Approach Consumer Protection Consumer Protection Act National Credit Act National Norms for consumer credit Access to consumer credit Unfair credit marketing practices Responsible credit granting and use Debt counselling and reorganisation Consumer Credit Information National Credit Regulator (NCR) • National Norms for consumer protection • Fair and sustainable market place for consumer products • Consumer information and disclosure • Unfair marketing and business practices • Responsible consumer behavior • National Consumer Commission (NCC)

4. General Application • Consumer Protection Act, National Credit Act and Competition Act are laws of general application • Sector specific regulators are created for sectors such banking, energy, telecommunications • Sector specific regulators monitor standards given the peculiar nature of a sector, such as banking, to ensure financial stability • Framework must mitigate threats of forum shopping, regulatory capture and regulatory arbitrage • Provisions dealing with coordination are imbedded in both sector and general legislation • Banking industry is governed through the Banks Act to ensure financial stability – prudential regulation

5. Coordination • Section 17(4) provides for the NCR to: • liaise with any regulatory authority on matters of common interest • Negotiate agreements with any regulatory authority to coordinate and harmonise exercise of jurisdiction • Participate in proceedings of any regulatory authority • Advise or receive advice from any regulatory authority • Protocol was adopted to coordinate communication between NCR and the Registrar of Banks • Coordination does not affect the mandate of each regulator, but seeks to ensure coordinated enforcement action

6. Policy Approach Amendments to NCA Reckless Lending Improved regulation All credit providers to be registered irrespective of size Standard of service and procedures for debt counselors Framework for Payment Distributing Agencies Improved coordination and cooperation among regulators Registration of Alternative Dispute Resolution agents Revising governance structure of the NCR • Affordability Assessment Regulations • Powers of NCR to investigate reckless lending • Power of NCT to deal with reckless lending • Disclosure of total cost of credit and capping of credit insurance • Prohibition of sale and collection of prescribed debt • Automatic removal of adverse of adverse credit information

7. Functions of NCR Registration and Public Information Enforcement Promote informal resolution of disputes Receive complaints regarding contraventions Monitor and detect prohibited conduct Proactive and reactive investigations Issue and enforce compliance notices Negotiate and conclude consent orders Refer anticompetitive matters to the Competition Tribunal Refer matters to NCT • Manage registration of all relevant industry players • Increase knowledge, nature and dynamics of the industry • Promote public awareness by implementing education measures • Provide guidance to the credit market and industry through explanatory notices • Seeking declaratory orders on the interpretation • Monitoring socio economic patterns and market trends

8. Over-Indebtedness • Research conducted highlighted the following concerns • Reckless lending • Gap in affordability assessment • Abuse of credit insurance • High cost of credit • Judgments and garnishees • Lack of education and awareness about credit • Listing requirements • Discretionary credit guidelines • Honesty and disclosure by credit providers and consumers • Cabinet established Joint Working Committee to implement coordinated measures (Department of Justice, National Treasury and the dti)

9. Way Forward • the dti has published regulations, which include affordability assessment regulations on 1 August 2014 – closing date for comments 31 August 2014 • Affordability Assessment regulations include the following interventions • Discretionary Income, including creation of the buffer • Clarifying statutory deductions • Clarify maintenance as part of necessary expenses • Oversee and guide regulators on the implementation of the new amendments, including education and awareness of consumers • Facilitate continuous coordination between the regulators to ensure harmony in regulating the sector

10. Thank You