The so-called Credit Amnesty has been reported upon by the media quite extensively in the recent past. Various opinions on the influence which the National Credit Amendment Bill of 2013 (“the Bill”) will have on the economy have also been printed. This article, however, will be limited to an explanation of what the aforesaid amendment entails.

The Bill provides for the automatic removal of adverse consumer information. Clause 13 of the Bill envisions the insertion of a section 71A into the National Credit Act, 34 of 2005 (“the Act”) in terms whereof a credit provider must submit to a credit bureau within seven days of the settlement by a consumer of any obligation under any credit agreement information regarding such settlement. Within a further seven days, after receipt of the aforementioned information, the credit bureau must remove any adverse listing pertaining to an adverse classification of consumer behaviour, an adverse classification of enforcement action against the consumer or a payment profile listed in the consumer credit payment profile. For purposes of the aforesaid, section 71A provides the following definitions:

“Adverse classification of consumer behaviour means classification relating to consumer behaviour and includes a classification such as ‘delinquent’, ‘default’, ‘slow paying’, ‘absconded’ or ‘not contactable’;” and “Adverse classification of enforcement action means classification relating to enforcement action taken by the credit provider, including a classification such as ‘handed over for collection or recovery’, ‘legal action’ or ‘write off’”.

Despite much speculation the amendment does not have the effect of a “free for all” and a consumer will only experience the benefits of the amendment once his debt to a credit provider has been settled in full.

The retention periods for credit bureau information are currently contained in the provisions of Regulation 17 to the Act. In terms of the aforesaid regulation, the maximum period for which adverse classifications of consumer behaviour may be displayed is a period of one year and for adverse classification of enforcement action, a period of two years.

Should the proposed amendments in the Bill be effected, consumers will no longer be in the position where they are affected negatively due to an adverse classification. In practice, this will mean that a consumer will nearly as soon as he settles his outstanding obligations be in a position to apply for further credit without the constraint of his previous negative credit record. What must further be noted is that the above amendments are only applicable to listings of “delinquent”, “default”, “slow paying”, “absconded” or “not contactable”, “handed over for collection or recovery”, “legal action” and “write off”. The remainder of the categories of consumer credit information will therefore remain unaffected and the maximum period for the display of the latter information remains the same.

In practice, credit providers will no longer have the luxury of requesting an accurate credit record of a consumer’s repayment history as the above adverse listings must effectively be removed within 14 days of settlement by a consumer of his debts. This will greatly increase the risk for credit providers and furthermore may lead to more reckless credit being granted as it will limit credit providers’ means to assess the debt re-payment history of a consumer under credit agreements. In order to limit your risk as a credit provider, it is suggested that you request advice from an attorney as to how your risk of recovery of credit granted may be limited.

Andries Stander is an attorney at Barnard Incorporated in Centurion.


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