Economic Development & Tourism NATIONAL CREDIT BILL

1. Economic Development & Tourism NATIONAL CREDIT BILL BILL B18 – 2005, published in GG 27529 on 26 April 2005 Presentation by the Western Cape Department of Economic Development & Tourism Prepared and presented by: Raybin Windvogel Manager: Office of the Consumer Protector … the key issues confronting our people: creating work and fighting poverty.Premier Ebrahim Rasool, April 2004

2. Economic Development & Tourism • Introduction • Bill based on the outcomes of Credit Policy Review by Technical Committee appointed by Minister of Trade and Industry in 200 • Initially published as Consumer Credit Bill in GG 26678 on 17 August 2004 • Extensive public participation process followed between September 2004 and March 2005 • After incorporation of some of comment and proposals by stakeholders, revised version of Bill published on 26 April 2005 as National Credit Bill … the key issues confronting our people: creating work and fighting poverty.Premier Ebrahim Rasool, April 2004

3. Economic Development & Tourism • Bill seeks to: • Create single, simple law governing all aspects of credit extension • Remove unfair discrimination in credit market, providing all consumers (and some businesses) with rights and improve access to and flow of information to by and to consumers • Provide measures against over-indebtedness of consumers • Regulate the credit information industry • Create a new regulatory framework … the key issues confronting our people: creating work and fighting poverty.Premier Ebrahim Rasool, April 2004

4. Economic Development & Tourism Current position:New (i.t.o. Bill): 1. Usury Act, No. 73 of 1968 (with Exemption - To be repealed Notice), regulates lending and lending rates 2. Credit Agreements Act, No. 75 of 1980, - To be repealed regulates HPs 3. Magistrate’s Courts Act, No. 32 of 1944, - To be retained, subject to regulates collection of debt remedies under this Bill 4. Common law - To be modified by various provisions in this Bill … the key issues confronting our people: creating work and fighting poverty.Premier Ebrahim Rasool, April 2004

5. Economic Development & Tourism • Department’s view of Bill: • The Western Cape, together with other provincial consumer affairs offices (PCAOs), submitted a collective response to the initial version of the Bill in October 2004 • Primary view of Department – Bill represents major step towards more effective regulation of credit extension and credit information • Further – Credit information industry is imperative to a sound, well- functioning credit market and economy. Indispensable tool to determine risk and prevent escalation of cost of goods and money to compensate for risk … the key issues confronting our people: creating work and fighting poverty.Premier Ebrahim Rasool, April 2004

6. Economic Development & Tourism • Department’s view of Bill (cont.): However, Bill, even in revised form • Does not address concerns raised, or accommodate amendments proposed by Department (through PCAO submission) (except w.r.t. erstwhile s105(3)(a), now s127(4)(a)) • Concentrates authority to register credit providers, credit bureaux and debt counsellors (with limited exceptions) at the National Credit Regulator (NCR) • Vests exclusive authority to appoint inspectors with NCR • Compromises Provinces with regard to jurisdiction • Does not lend itself to effective enforcement across the country … the key issues confronting our people: creating work and fighting poverty.Premier Ebrahim Rasool, April 2004

7. Economic Development & Tourism • Comment on specific provisions/sections: • Section 12 (section 12 in previous Bill): Suggested that it be amended to provide for Provincial Credit Regulators (PCRs) in addition to National Credit Regulator (NCR) • Will bring about consistency in application of legislation across provinces • Amendment not “constitutionally unsound” if assented to by provinces • Would necessitate re-drafting of other sections of Bill • Section 14 (section 13 in previous Bill): Provision to be made for PCRs to register all (branches of) credit providers operating within a province • Not impossible or impractical • Precedent for such sharing of registration responsibilities exists – National Liquor Act, No. 59 of 2003, and provincial liquor acts and Bills … the key issues confronting our people: creating work and fighting poverty.Premier Ebrahim Rasool, April 2004

8. Economic Development & Tourism • Comment on specific provisions/sections (cont.): • Section 14 (cont.): • National Liquor Authority (NLA) registers particular section of industry • (macro-manufacturers and distributors) and provincial Liquor Boards • licence all retail liquor outlets operating in a province, regardless of • whether it also operates in (an)other province(s) • Credit providers registered with PCR i.t.o. current Bill, and being investigated by PCR, could thwart action by opening branch across provincial border • Inability by PCR to deregister credit providers and debt counsellors in its • area of jurisdiction will compromise public perception of PCR as a • protection institution … the key issues confronting our people: creating work and fighting poverty.Premier Ebrahim Rasool, April 2004

9. Economic Development & Tourism • Comment on specific provisions/section (cont.): • Section 25 (section 31 in previous Bill): Suggested that PCRs also be given authority to appoint inspectors • Will make for better, more efficient enforcement in provinces • Current situation, with MFRC, having exclusive authority in inspecting • microlenders, demonstrates problem • Quick reaction aids service delivery, adherence to Batho Pele • Section 73 (section 62 in previous Bill): Noted with approval that the prohibition on negative option marketing, including unsolicited increase in credit limits, is retained … the key issues confronting our people: creating work and fighting poverty.Premier Ebrahim Rasool, April 2004

10. Economic Development & Tourism • Other comments: • Section 8 (section 6 in previous Bill): Lay-byes still not included in definition of credit agreements • Section 93 (section 72 in previous Bill): Still no time period stipulated within which credit provider must provide copy of credit agreement to consumer • Section 129(1)(a): “may” should be removed and replaced with “must” to make it peremptory, and stipulate timeframe • and (3)(b): “may” to be replaced with “shall be entitled to”, as previously suggested … the key issues confronting our people: creating work and fighting poverty.Premier Ebrahim Rasool, April 2004

11. Economic Development & Tourism • Other comments: • Has a costing analysis been done for implementation of Bill? • If so, different scenarios to be considered, taking into account model suggested by provinces … the key issues confronting our people: creating work and fighting poverty.Premier Ebrahim Rasool, April 2004

12. Economic Development & Tourism THANK YOU! … the key issues confronting our people: creating work and fighting poverty.Premier Ebrahim Rasool, April 2004

13. Economic Development & Tourism QUESTIONS? … the key issues confronting our people: creating work and fighting poverty.Premier Ebrahim Rasool, April 2004