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NATIONAL CREDIT REGULATIONS

NATIONAL CREDIT REGULATIONS. Process. Final amendments approved in National Assembly on 13 December 2005 President signed National Credit Act, No 34 of 2005, on 10 March 2006 Act expected to come into effect on 1 June 2006

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NATIONAL CREDIT REGULATIONS

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  1. NATIONAL CREDIT REGULATIONS

  2. Process • Final amendments approved in National Assembly on 13 December 2005 • President signed National Credit Act, No 34 of 2005, on 10 March 2006 • Act expected to come into effect on 1 June 2006 • Regulations –published for comment 15 Feb ‘06, for final publication in April ‘06 • Data verification, cleansing and removal process to be concluded within 6 months of Act coming into effect • National Credit Regulator to be operational in June 2006; Consumer Tribunal within 3 months of Act coming into effect

  3. Index CHAPTER 1: INTERPRETATION AND APPLICATION OF ACT CHAPTER 2: REGISTRATION REQUIREMENTS, CRITERIA AND PROCEDURES • Part A: Registration requirements for all registrants • Part B: Cancellation of registration • Part C: Debt Counsellor • Part D: Compliance procedures CHAPTER 3: CONSUMER CREDIT POLICY • Part A: Credit Information • Part B: Consumer rights • Part C: Credit marketing practices • Part D: Over-indebtedness, reckless lending and debt counseling CHAPTER 4: CONSUMER CREDIT AGREEMENTS • Part A: Pre-agreement disclosure • Part B: Form of credit agreements

  4. Index CHAPTER 5: INTEREST AND FEES • Part A: Interpretation • Part B: General stipulations • Part C: Other fees, costs and charges • Part D: Interest applicable to different products CHAPTER 6: DISPUTE RESOLUTION CHAPTER 7: RECORD- KEEPING AND REGISTERS • Part A: Record-keeping • Part B: Registers CHAPTER 8: COMPLIANCE AND REPORTING • Part A: Credit Provider compliance reports • Part B: Debt counsellor compliance reports • Part C: Credit Bureau compliance reports CHAPTER 9: TRANSITIONAL PROVISIONS CHAPTER 10: PRESCRIBED FORMS

  5. Registration Registration requirements Regulations provide detail as required by the Act in respect of - • Application for registration • Disqualification of natural person from registration • Conditions of registration • Review of condition of registration • Certificate of registration • Voluntary cancellation of registration

  6. Registration Further criteria for registration as a debt councellor Education • Grade 12 or equivalent Level 4 • Successful completion of debt councelling course Experience and competence • minimum of two years working experience in any of the following fields- • consumer protection, complaints resolution or consumer advisory service; • legal or para-legal services; or • accounting or financial services; • demonstrated ability to manage his/her own finances at the time of applying for registration

  7. Compliance procedures Compliance procedures • Appointment of inspectors and investigators • Notice to unregistered persons • Compliance notices • Objection to notices • Administrative fines • Calculation of annual turnover

  8. Credit Bureaux Regulations for the regulation of Credit Bureaux • Maximum periods for which consumer credit information may be displayed • Standards for the maintenance and retention of records • Prohibited information • Purposes for which information may be used • Standards for the submission of consumer credit information to a credit bureau

  9. Credit information Retention periods for credit bureau information

  10. Credit information Standards for maintenance and retention of consumer credit information Consumer credit records must - • be identified by the consumer’s identity number or passport number • remain confidential and secure • be protected against accidental, unlawful destruction and unlawful intrusion • be protected against loss or wrongful alteration • be protected against unauthorised disclosure or access by any unauthorised person.

  11. Credit information Prohibited consumer credit information • political affiliation • medical status or history • religion or thought, belief or opinion • sexual orientation • membership of a trade union

  12. Credit information Purposes for which consumer credit information may be used • an affordability assessment with consumer’s consent • a credit assessment with consumer’s consent • an investigation into fraud, corruption or theft • fraud detection and fraud prevention services • considering a candidate for employment in a position that requires trust and honesty and entails the handling of cash or finances, with consumer’s consent • an assessment of the debtors book of a business • setting a limit of service provision in respect of any continuous service • assessing an application for insurance • verifying qualifications and employment • obtaining consumer information to distribute unclaimed funds, including pension funds and insurance claims • tracing of a consumer by a credit provider in respect of a credit agreement with consumer’s consent • developing of a credit scoring system by a credit provider or credit bureau

  13. Credit Information Right to challenge information • Sets out process, responsibilities • Data verification and clean-up of credit bureau information to be published within 6 months after Act comes into effect • Regulations to establish National Credit Register to be published at later date

  14. Prescribed information Prescribed information to be submitted Regulations require consumer to submit specific information in the case of - • Application for debt review Regulations require credit provider to submit specific information in the case of - • Pre-agreement disclosure and quotation • Small agreements • Intermediate and large agreements • Statement of account Regulations require specific form/format for - • Small credit agreements • Intermediate and large credit agreements

  15. Interest and fees Calculation, levying and capitalisation • Formula for calculation of maximum interest for different product groups • Rules in respect of maximum fees • Initiation fee • Monthly service fee • Detail provisions related to the levying and capitalisation of interest and fees • Other permitted fees • Default administration charges • Collection costs

  16. Registers Requirements for registers • Records of registered activities kept by registrant • National record of registration kept by NCR • Register of marketing options kept by registrant • Register of agents kept by registrant

  17. Compliance Requirements for compliance reports to be submitted to NCR • Credit Provider compliance reports • Debt counsellor compliance reports • Credit Bureau compliance reports

  18. Thresholds Ministerial notice National Credit Act does not apply to agreements where consumer is a juristic person whose asset value exceeds R1 000 000 Small agreements Below R15 000 Intermediate agreements Between R15 000 and R250 000 Large agreements Above R250 000

  19. THANK YOU

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