NATIONAL CREDIT REGULATOR Annual Report 2013/2014 First Quarter Performance Report 2014/2015   Presentation to the Portfolio Committee on Trade & Industry By Ms Nomsa Motshegare, NCR CEO Date: 16.09.2014

OVERVIEW OF PRESENTATION Performance against Annual Targets 13/14 First Quarterly Performance Report 14/15 Financial Information Key Successes and Challenges

PERFORMANCE AGAINST ANNUAL TARGETS Strategic Objective 1 (SO1) To promote increased access to credit through responsible credit granting. Output Targets to be delivered by 31 March 2014 Actual Achievement Implementation plan of the research recommendations. Report on implementation of recommendations. Achieved Establishment of the National Register of Credit Agreements (NRCA) database. - Produce final functional specification document of the NRCA - Establish NCRA Steering Committee. Proposal on Affordability Assessment Guidelines. Develop proposal on affordability assessment guidelines.

PERFORMANCE AGAINST ANNUAL TARGETS cont. Strategic Objective 2 (SO2) To protect consumers from abuse and unfair practices in the consumer credit market and address over-indebtedness Output Targets to be delivered by 31 March 2014 Actual Achievement Implementation report of the consumer rights awareness strategy. Produce a report on implementation of the strategy. Achieved Implementation report of the approved Enforcement strategy. Implementation report of the stakeholder strategy.

PERFORMANCE AGAINST ANNUAL TARGETS cont. Strategic Objective 3 (SO3) To continually enhance a consumer credit market regulatory framework Output Targets to be delivered by March 2014 Actual Achievement Credit bureau compliance Assessment reports. 2 credit bureaus’ investigations conducted & enforcement action taken in terms of section 43, 70, 71 , 72 and regulations 17 to 20 of the NCA. (Registration; receipt & retention of info.) Achieved Approved and implemented on-site visit guidelines. On-site guidelines to be approved and 12 on site visits to be conducted. Exceeded On-site visit guidelines approved and 14 on-site visits conducted. On-site guidelines approved and implemented a month in advance. Reason for variance

Performance against the annual performance plan PERFORMANCE AGAINST ANNUAL TARGETS cont. Strategic Objective 4 (SO4) To monitor and improve NCR’s effectiveness in fulfilling its mandate Output Performance measure or indicator Targets to be delivered by 31 March 2014 Actual Achievement Stakeholder assessment surveys conducted to improve service delivery. Percentage of the positive response rate. 50% positive response rate. Achieved Functional new Information and Communication Technology (ICT) System. -Functional Complaints ICT sub system. -Go live report on registrations sub system. -Go live registrations sub system. Not achieved Registrations sub system did not go live as planned. ICT technical problems identified. Project on hold. Reason for variance

FIRST QUARTER PERFORMANCE REPORT 2014/15 FINANCIAL YEAR Output Performance Measure or Indicator Annual Targets 1st Quarter milestone Actual Achievement SO 1: To promote increased access to credit through responsible credit granting Increase awareness of affordability assessment regulations. No. of workshops conducted. 9 workshops conducted on affordability assessment regulations. N/A - Affordability assessment regulations not yet in force - Were published for comment in August 2014. Reduce cost of credit for consumers Study conducted on Levels of the cost of credit. Conduct a study to review the current levels of the cost of credit. Procure the services of a service provider to conduct the review. Achieved

FIRST QUARTER PERFORMANCE REPORT 2014/15 FINANCIAL YEAR cont. Output Performance Measure or Indicator Annual Targets 1st Quarter milestone Actual Achievement SO 2: To protect consumers from abuse and unfair practice in the consumer credit market and address over-indebtedness Conduct reckless lending investigations and issue notices/compliance certificates where applicable. No. of compliance certs/ notices issued.   15 Compliance notices. 3 Compliance notices Exceeded 6 compliance notices issued. Implemented new strategy to combat unlawful advertisements Reason for variance

FIRST QUARTER PERFORMANCE REPORT 2014/15 FINANCIAL YEAR cont. Output Performance Measure or Indicator Annual Targets 1st Quarter milestone Actual Achievement SO3: To enhance a consumer credit market regulatory framework Conduct investigations and take enforcement action on credit bureaus. Number of investigations and enforcement action taken. 2 Credit bureaus investigated and enforcement action taken. Draft terms of reference. Achieved Conduct compliance on site visits Number of compliance on-site visits conducted. 18 on site visits to be conducted. * 6 on site visits to be conducted * Focus areas: Ads & marketing material; Affordability assessments; Removal of adverse consumer credit information.

FIRST QUARTER PERFORMANCE REPORT 2014/15 FINANCIAL YEAR cont. Output Performance Measure or Indicator Annual Target 1st Quarter milestone Actual Achievement SO 4: To improve NCR's operational effectiveness Improve operational efficiency through automated processes. ICT recommendations implemented. Implementation of recommendations of the ICT assessment Conduct an assessment on the current ICT system. Achieved Increase the number of leaners recruited and trained Number of learners recruited and trained. 20 Placement and training of learners

FIRST QUARTER PERFORMANCE REPORT 2014/15 FINANCIAL YEAR cont. Output Performance Measure or Indicator Annual Target 1st Quarter milestone Actual Achievement SO 5: To ensure effective implementation of the National Credit Amendment Act (NCAA) Create awareness of the NCAA. Number and nature of awareness campaigns conducted. 30 workshops with relevant stakeholders and monitor compliance with the NCAA. 10 workshops Exceeded 52 workshops The workshops were mainly on the removal of adverse consumer credit information. 18 Radio / TV interviews/ News print and monitor compliance with the NCAA. 8 Radio / TV interviews/ News print. Exceeded 50 radio/TV Interviews/news print. Removal of adverse consumer credit information was a topical issue. Reason for variance Reason for variance

FIRST QUARTER PERFORMANCE REPORT 2014/15 FINANCIAL YEAR cont. SO 5: To ensure effective implementation of the National Credit Amendment Act (NCAA) (continued) 5 of the following activities: - Exhibitions - Mall activations - Outside broadcast (OB) - Road shows and monitor compliance with the NCAA. 2 activities Exceeded 13 exhibitions /road shows. Removal of adverse consumer credit information was a topical issue. Conduct special investigations and take enforcement action where applicable. Number of raids conducted on unregistered credit providers. Conduct 2 raids in any province and take enforcement action where applicable. Commence with planning for the raids. Achieved Reason for variance

FIRST QUARTER PERFORMANCE REPORT 2014/15 FINANCIAL YEAR cont. Output Performance Measure or Indicator Annual Target 1st Quarter milestone Actual Achievement SO 5: To ensure effective implementation of the National Credit Amendment Act (NCAA) Conduct special investigations and take enforcement action where applicable. Number of investigations conducted on removal of adverse consumer credit information regulations. 10 investigations on large credit providers. Investigate 5 entities. Achieved Number of investigations conducted on unsolicited credit provision and enforcement action taken 15 N/A

FINANCIAL INFORMATION Financial Performance - 2013/14 2013/14 (Budget) 2013/14 (Actual) 2012/13 (Actual) R million R million Total Income 99,2 94,9 93,5 Expenditure (124,9) (121,0) (109,2) (Deficit) for the year *(25,7) (26,0) (15,7) Total Assets 19,9 64,0 70,4 * Deficit funded by reserves Report of Auditor-General Unqualified opinion No findings on compliance and supply chain management No findings on performance information

FINANCIAL INFORMATION cont. Budget 2014/15 (R) 2013/14 (R) Variance (R) Operations 117,761,427 117,479,709 281,718 Capex 11,692,717 19,918,172 (8,225,455) Total budget 129,454,144 137,397,881 (7,943,737) Less funding deficit (15,652,801) -   Actual budget 113,801,343 (23,596,538) Funding of deficit – 2014/15 (R) Bytes - suspended 7,000,000 HR savings 4,000,000 2014 Premises Professional fees (Imp. Assess.) 4,652,801 15,652,801

FINANCIAL INFORMATION cont.   Actual Budget Variance June Remaining budget R  % Income Fees from registrants* 6,659,620 5,654,112 1,005,508 17.78 38,387,132 DTI Transfers 38,307,000 38,307,066 -66 25,538,044 Other income 925,786 669,000 256,786 38 2,331,000 TOTAL INCOME 45,892,406 44,630,178 1,262,228 2.83 66,256,176 Expenditure Personnel costs 16,610,454 15,877,986 -732,468 -4.61 55,732,307 Professional fees 868,636 1,004,000 135,364 -12.96 15,634,425 Counsumer education 1,351,368 1,524,384 173,016 11.35 4,608,343 Debt relief 93,307 239,737 146,430 83.92 3,539,015 Other expenses 3,641,647 3,659,529 17,882 -13 15,745,533 TOTAL EXPENDITURE 22,565,412 22,305,636 -259,776 -1 95,259,623 Highlights * Fees collected from registrants exceeded budget by R1mil. * Personnel overspent due to filling of existing vacancies sooner than had budgeted for (timing differences)

FINANCIAL INFORMATION cont. Items Spent (R) Annual Budget (R) Variance (R) Variance (%) Remaining for the year Capital expenditure 855,991 3,971,263 3,115,272 78% Projects-ICT* - 7,721,454 100% TOTAL 11,692,717 10,836,726 93% Highlights *ICT system currently on hold.

KEY SUCCESSES AND CHALLENGES Established Credit Industry Forum Enforcement Action: Rolled out 3rd Learnership Programme  23 referrals to the Tribunal CHALLENGES Fines imposed of R1.8million Funding Raids conducted in 3 provinces Office Space Consumer education: Consumer Education: Rural and semi- urban areas Advertising Value Equivalent of >R200m: Across all media channels 49 exhibitions, activations, road shows Education workshops: Provincial Consumer Protection Desks; Trade Unions, Universities, Church Groups, Tribal Authorities

Thank You! www.ncr.org.za