NATIONAL CREDIT REGULATIONS

Process Final amendments approved in National Assembly on 13 December 2005 President signed National Credit Act, No 34 of 2005, on 10 March 2006 Act expected to come into effect on 1 June 2006 Regulations –published for comment 15 Feb 06, for final publication in April 06 Data verification, cleansing and removal process to be concluded within 6 months of Act coming into effect National Credit Regulator to be operational in June 2006; Consumer Tribunal within 3 months of Act coming into effect

Index CHAPTER 1: INTERPRETATION AND APPLICATION OF ACT CHAPTER 2: REGISTRATION REQUIREMENTS, CRITERIA AND PROCEDURES Part A: Registration requirements for all registrants Part B: Cancellation of registration Part C: Debt Counsellor Part D: Compliance procedures CHAPTER 3: CONSUMER CREDIT POLICY Part A: Credit Information Part B: Consumer rights Part C: Credit marketing practices Part D: Over-indebtedness, reckless lending and debt counseling CHAPTER 4: CONSUMER CREDIT AGREEMENTS Part A: Pre-agreement disclosure Part B: Form of credit agreements

Index CHAPTER 5: INTEREST AND FEES Part A: Interpretation Part B: General stipulations Part C: Other fees, costs and charges Part D: Interest applicable to different products CHAPTER 6: DISPUTE RESOLUTION CHAPTER 7: RECORD- KEEPING AND REGISTERS Part A: Record-keeping Part B: Registers CHAPTER 8: COMPLIANCE AND REPORTING Part A: Credit Provider compliance reports Part B: Debt counsellor compliance reports Part C: Credit Bureau compliance reports CHAPTER 9: TRANSITIONAL PROVISIONS CHAPTER 10: PRESCRIBED FORMS

Registration Registration requirements Regulations provide detail as required by the Act in respect of - –Application for registration –Disqualification of natural person from registration –Conditions of registration –Review of condition of registration –Certificate of registration –Voluntary cancellation of registration

Registration Further criteria for registration as a debt councellor Education Grade 12 or equivalent Level 4 Successful completion of debt councelling course Experience and competence minimum of two years working experience in any of the following fields- –consumer protection, complaints resolution or consumer advisory service; –legal or para-legal services; or –accounting or financial services; demonstrated ability to manage his/her own finances at the time of applying for registration

Compliance procedures –Appointment of inspectors and investigators –Notice to unregistered persons –Compliance notices –Objection to notices –Administrative fines Calculation of annual turnover

Credit Bureaux Regulations for the regulation of Credit Bureaux Maximum periods for which consumer credit information may be displayed Standards for the maintenance and retention of records Prohibited information Purposes for which information may be used Standards for the submission of consumer credit information to a credit bureau

Credit information Retention periods for credit bureau information Categories of consumer credit information Retention period Details and results of disputes lodged by consumers 18 months Inquiries3 years Payment Profile5 years Adverse information1 year Debt Re-arrangementEarlier of 3 years or until a clearance certificate is issued Civil court judgmentsEarlier of 5 years or until the judgment is rescinded/abandoned Administrations OrdersEarlier of 10 years or until order is rescinded by a court SequestrationsEarlier of 10 years or until rehabilitation order is granted LiquidationsUnlimited period Rehabilitation Orders5 years

Credit information Standards for maintenance and retention of consumer credit information Consumer credit records must - –be identified by the consumers identity number or passport number –remain confidential and secure –be protected against accidental, unlawful destruction and unlawful intrusion –be protected against loss or wrongful alteration –be protected against unauthorised disclosure or access by any unauthorised person.

Credit information Prohibited consumer credit information –political affiliation –medical status or history –religion or thought, belief or opinion –sexual orientation –membership of a trade union

Credit information Purposes for which consumer credit information may be used an affordability assessment with consumers consent a credit assessment with consumers consent an investigation into fraud, corruption or theft fraud detection and fraud prevention services considering a candidate for employment in a position that requires trust and honesty and entails the handling of cash or finances, with consumers consent an assessment of the debtors book of a business setting a limit of service provision in respect of any continuous service assessing an application for insurance verifying qualifications and employment obtaining consumer information to distribute unclaimed funds, including pension funds and insurance claims tracing of a consumer by a credit provider in respect of a credit agreement with consumers consent developing of a credit scoring system by a credit provider or credit bureau

Credit Information Right to challenge information –Sets out process, responsibilities –Data verification and clean-up of credit bureau information to be published within 6 months after Act comes into effect –Regulations to establish National Credit Register to be published at later date

Prescribed information Prescribed information to be submitted Regulations require consumer to submit specific information in the case of - –Application for debt review Regulations require credit provider to submit specific information in the case of - –Pre-agreement disclosure and quotation Small agreements Intermediate and large agreements –Statement of account Regulations require specific form/format for - Small credit agreements Intermediate and large credit agreements

Interest and fees Calculation, levying and capitalisation Formula for calculation of maximum interest for different product groups Rules in respect of maximum fees –Initiation fee –Monthly service fee Detail provisions related to the levying and capitalisation of interest and fees Other permitted fees –Default administration charges –Collection costs

Interest limitInitiation fee Initiation fee may never exceed 15% of the loan amount Service fee Mortgage agreements 20%R1000 to R5000 increasing by 5% of amount > R1000 R50 pm Credit facilities 25%R150 to R500 increasing by 1% of amount > R1000 R50 pm Unsecured credit transactions 35%R150 to R500 increasing by 5% of amount > R1000 R50 pm Developmental credit agreements for the development of a small business 35%R250 to R2500 increasing by 5% of amount > R1000 R50 pm for low income housing (unsecured) 35%R500 to R2500 increasing by 5% of amount > R1000 R50 pm Short term loans 48% (4% pm) R150 to R350 increasing by 5% of amount > R1000 R50 pm Other credit transactions 25%R150 to R500 increasing by 5% of amount > R1000 R50 pm

Registers Requirements for registers Records of registered activities kept by registrant National record of registration kept by NCR Register of marketing options kept by registrant Register of agents kept by registrant

Compliance Requirements for compliance reports to be submitted to NCR –Credit Provider compliance reports –Debt counsellor compliance reports –Credit Bureau compliance reports

Thresholds Ministerial notice National Credit Act does not apply to agreements where consumer is a juristic person whose asset value exceeds R Small agreementsBelow R Intermediate agreementsBetween R and R Large agreementsAbove R

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