Amendments will?protect?you more

2014-06-08 15:00

When the National Credit Act was first introduced in 2007, it was hailed as a milestone in consumer protection. But as time passed, it became clear there were loopholes in the wording of the act, which creditors wasted no time taking advantage of.

Fast-forward seven years and the National Credit Amendment Bill, which has just been signed by the president, is intended to close those loopholes so consumers are afforded the level of protection initially intended by the act.

How the amended act will protect you better

A section 129 notice is a letter of demand that credit providers have to send you to when you default on payments. They cannot initiate any legal action against you before a section 129 notice has been issued. Before the creditor can send this notice, you must be in default for at least 20 working days.

Previously, if a section 129 notice had been issued, you were not allowed to include that account in your debt review. Under the amendments to the act, you can now include such an account if you apply for debt review within 10 days of receiving the section 129 notice.

When you are under debt review, creditors cannot terminate the debt review process if a court date has been set.

Previously, creditors were able to terminate your debt review process on technicalities, even if your case had been assigned a date on the court roll.

Wikus Olivier, a debt counsellor at DebtSafe, says the problem is that courts are so full that often the earliest court date available is in one to two years’ time.

But the act states that credit providers cannot terminate or stop the debt review process within 60 days of the application for debt review.

“The amendment means that debt counsellors will have to up their game and ensure that they get your case on the court roll within 60 days of your debt review application,” Olivier explains.

Affordability assessments will become stricter

Despite the fact that creditors are forced to carry out affordability assessments before they grant you credit, in many cases the actual assessment is mere lip service.

This has resulted in credit being granted to consumers who are unable to afford it and, in some cases, creditors simply relied on credit reports when doing affordability assessments.

In future, creditors will have to ask for more proof of certain income and expenses rather than simply taking your word for it.

A debt clearance certificate may be issued if you have paid off all debt besides your home loan

When you go under debt review, you are no longer able to access any credit until your debt counsellor issues you with a clearance certificate stating that all your debt has been repaid. But the original act did not take into account your debt might include a 20-year home loan.

The new amendment allows a debt clearance certificate to be issued, provided larger debts, such as your home loan, are up to date.

Prescribed debt cannot be collected or sold to a third party

Once your debt has been prescribed, credit providers are no longer allowed to “sell” the debt to a third party. Prescribed debt is any debt that has expired under the Prescription Act.

If you have not acknowledged a debt verbally or in writing and the creditor does not issue you with a summons, then the debt prescribes or expires after three years.

You must also not have made any payments or promises to pay in order for a debt to be considered prescribed. Previously, credit providers would sell their prescribed books to debt collectors, who then tried to intimidate or convince consumers to take an action that would interrupt the prescription.

Removal of adverse credit information

If you have repaid a debt, all the negative information related to that debt, such as “judgments”, “slow payer” or “absconded”, must be removed from your credit profile.

There are different time frames as per the National Credit Act for different listings. For example, your payment history stays on your credit profile for two years.

Alternative dispute resolution agents

These agents will have to register with the National Credit Regulator to handle disputes between consumers and creditors on a voluntary basis. “We expect that many debt counsellors will register as alternative dispute resolution agents to offer a broader service,” says Olivier.

All credit providers must be registered

Previously, only credit providers that exceeded certain thresholds had to be registered with the regulator. Under the new amendments, any person or company that gives out loans or credit now has to be registered. This will bring microlenders under closer scrutiny.

You can visit the regulator’s website ( to see if your credit provider is registered.

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