The Sixth Annual African Consumer Protection Dialogue

Conference

“Misleading advertisement and reckless lending”

September 2014, Lilongwe, Malawi

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Credit Providers

Credit Providers = +5,000

Credit Bureaus

21.71 million Credit Active Consumers

Debt Counsellors Credit Bureaus = 14

Debt Counsellors = +2,000

The current credit landscape

The current credit landscape…performance of consumers

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- The removal of adverse project was completed at the end of May 2014

- An improvement the profile of consumers in the March 2014 quarter…but many still

have impaired records

The current credit landscape…the performance of accounts

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- Accounts also showed an improvement post the removal process

Some current challenges in the market

Inadequate affordability assessment

Growing number of consumers with impaired credit records

Excessive pricing of credit life insurance

Unprecedented growth in unsecured credit and slowdown in mortgage lending (effects of growth in unsecured credit still being felt now)

Emoluments attachment orders easily obtainable even on reckless credit

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Specific implementation problems

Generic requirement for affordability assessment not adequate (assessing financial means & debt repayment history)

- under-disclosure of consumers’ living expenses

- lack of verification of income disclosed

- credit bureau reports not obtained

- delay in approving & granting credit after obtaining credit reports

- lending to the maximum of the consumers’ available disposable income

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Cross-border issues

Many companies operating in other countries such as the US, UK, Australia, Mauratius opened offices in South Africa

Their business models not in line with the National Credit Act and have caused problems in the South African credit market

There is a need for a co-ordinated approach to cross-border regulation and enforcement

NCR is proposing a formal international forum to discuss and formalises processes for cross border co-operation

Meetings will be scheduled with regulators

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Specific cases on overseas companies operating in South Africa

Wonga and Capfin

Lack of income & living expense verification

Inappropriate advertisements for credit (fast & easy loans, no payslip, only bring identity document)

Short term credit (up to 6 months & R8000)

Satinsky Group

Consumers enticed to participate in scheme for vehicle finance

Adverts for vehicle finance displayed on vehicles purchased through the scheme

Consumers paid commissions for the adverts

Scheme collapsed

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Thank You!

www.ncr.org.za