NATIONAL CREDIT REGULATOR A BRIEFING TO THE PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY: NCR STRATEGIC PLAN 2015/16 – 2019/20 & 3 YEAR ANNUAL PERFOMANCE PLAN 2015/16 – 2017/18 PRESENTED BY MS NOMSA MOTSHEGARE (NCR CEO) 14 April 2015

MANDATE OF THE NCR It is established in terms of the section 12 of the National Credit Act (NCA). Its main purpose is to regulate consumer credit, monitor compliance and enforce the NCA. The National Credit Amendment Act (NCAA): assented to and signed by the President on 19 May 2014; proclamation signed and regulation published on 13 March 2015

OVERVIEW OF THE PRESENTAION Vision and Mission NCR Programmes: Snapshot Government Priorities Dti Priorities: outcome 4 Programmes 1-5 3 Year annual performance plan 2015-2018 Budget: 2015/16 – 2019/20 Possible challenges for programmes 1-5 Remedies for challenges to programmes 1-5

VISION & MISSION VISION MISSION To promote a South African consumer credit market that is fair, transparent, accessible and dynamic. MISSION To support the social and economic advancement of South Africa, by: regulating for a fair and non-discriminatory market for access to consumer credit; and promoting responsible credit granting, use and effective redress.

NCR PROGRAMMES: A SNAPSHOT To promote responsible credit granting. To protect consumers from abuse and unfair practices in the consumer credit market and address over-indebtedness. To enhance the quality and accuracy of credit bureau information To improve NCR’s operational effectiveness To ensure effective implementation of the National Credit Amendment Act (NCAA).

GOVERNMENT PRIORITIES MTSF 2014-2019 Targets: Increasing employment & reducing unemployment Increase share in h/hold income of the poorest of h/holds NDP aim: Eliminate poverty, reduce inequalities & unemployment MTSF = Medium Term Strategic Framework h/holds = households

THE dti PRIORITY: OUTCOME 4 To achieve this national goal, the dti, plays a pivotal role in ensuring the achievement of Outcome 4. OUTCOME 4 Decent Employment through Inclusive Economic Growth.

Strategic Outcome – oriented goals PROGRAMME (1) dti Strategic Outcome – oriented goals Facilitate broad-based economic participation through targeted interventions to achieve more inclusive economic growth. To promote responsible credit granting NCR

Strategic Outcome – oriented goals PROGRAMME (2) dti Strategic Outcome – oriented goals Create a fair regulatory environment that enables investment, trade and enterprise development in an equitable and socially responsible manner To protect consumers from abuse and unfair practices in the consumer credit market and address over-indebtedness. To ensure effective implementation of the NCAA. NCR

Strategic Outcome – oriented goals PROGRAMME (3) dti Strategic Outcome – oriented goals Facilitate broad-based economic participation through targeted interventions to achieve more inclusive economic growth To enhance the quality & accuracy of credit bureau information NCR

Strategic Outcome – oriented goals PROGRAMMES (4&5) dti Strategic Outcome – oriented goals Promote a professional, ethical, dynamic, competitive and and customer-focused work environment that ensures effective and efficient service delivery To promote NCR’s operational effectiveness To ensure effective implementation of the NCAA NCR

3 YEAR ANNUAL PERFOMANCE PLAN Programme 1: To promote responsible credit granting. Goal/ Outcome Output Performance Indicator/ measure Estimate Performance Medium Term Targets 2014/15 2015/16 2016/17 2017/18 Reduced levels of over-indebtedness. Improve compliance with affordability assessment regulations. Number of workshops conducted on affordability assessment regulations and appropriate enforcement action taken where necessary. 1 workshop 9 workshops conducted on affordability assessment regulations. 9 provinces visited to monitor credit provider compliance and appropriate enforcement action taken on non-compliant credit providers where necessary and appropriate enforcement action taken on non-compliant credit providers where necessary.

3 YEAR ANNUAL PERFOMANCE PLAN Programme 1: To promote responsible credit granting Goal/ Outcome Output Performance Indicator/ measure Estimate Performance Medium Term Targets 2014/15 2015/16 2016/17 2017/18 Reduced levels of over-indebtedness. Improve compliance with affordability assessment regulations. Number of provinces visited to monitor compliance and appropriate enforcement action takenwhere necessary. R6.6m 9 provinces visited to monitor credit provider compliance and appropriate enforcement action taken on non-compliant credit providers where necessary R7.6m R8.4m

3 YEAR ANNUAL PERFOMANCE PLAN Programme 1: To promote responsible credit granting Goal/ Outcome Output Performance Indicator/ measure Estimate Performance Medium Term Targets 2014/15 2015/16 2016/17 2017/18 Affordable levels of credit promoted. Increase compliance with regulations pertaining to the total cost of credit Number of investigations conducted to enforce regulations and appropriate enforcement action taken where necessary. Conduct a study to review the current levels of the total cost of credit. R10.4m Conduct 10 investigations and appropriate enforcement action taken where necessary. R11.1m Conduct 15 R12m Conduct 18 where necessary R12.8m

Quarterly Milestones for Programme 1 Goal/ Outcome Output Performance Indicator/ measure Baseline 2015/16 Annual Target Quarterly Milestones 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Reduced levels of over-indebtedness Improve compliance with affordability assessment regulations. Number of workshops conducted on affordability regulations and appropriate enforcement action taken where necessary. provinces visited to monitor compliance and appropriate action takenwhere - 9 workshops 1 3 2 9 provinces visited to monitor credit providers R0.7m R1.8m R2.7m

Quarterly Milestones for Programme 1 Goal/ Outcome Output Performance Indicator/ measure Baseline 2015/16 Annual Target Quarterly Milestones 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Affordablelevelsof credit promoted. Increasecompliance withregulations pertaining to the total cost of credit Number of investigations conducted and appropriate enforcement action takenwhere necessary. Study conducted to review the current levels of the cost of creditand recommendations to the dti. Conduct 10 andappropriate 2 3 R11.1m R2.3m R3.25m

3 YEAR ANNUAL PERFOMANCE PLAN Programme 2: To protect consumers from abuse and unfair practices in the consumer credit market and address over-indebtedness. Goal/ Outcome Output Performance Indicator/ measure Estimate Performance Medium Term Targets 2014/15 2015/16 2016/17 2017/18 Decreased levels of reckless lending practices. Conduct reckless lending investigations and appropriate enforcement action where necessary. Number of credit providers investigated enforcement action taken where necessary. 15 Compliance notices/ compliance certificates where R29m 20 credit providers investigated and appropriate action taken where R30.4m 25 R32.9m 30 R35.6m

Quarterly Milestones for Programme 2 Goal/ Outcome Output Performance Indicator/ measure Baseline 2015/16 Annual Target Quarterly Milestones 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Decreased levels of reckless lending practices. Conduct reckless lending investigations and appropriate enforcement action where necessary. Number of credit providers investigated taken where necessary. 15 Compliance notices issued and compliance certificate where necessary. 20 credit providers investigated enforcement action taken where 4 6 5 R30.4m R5.9m R9.7m R7.4m

3 YEAR ANNUAL PERFOMANCE PLAN Programme 3: To enhance the quality and accuracy of credit bureau information Goal/ Outcome Output Performance Indicator/ measure Estimate Performance Medium Term Targets 2014/15 2015/16 2016/17 2017/18 Improved consumer credit information. Increase compliance by credit bureaus in respect of Number of credit bureau investigated and appropriate enforcement action taken where necessary. 2 credit bureau R14m R16m R17m R18.5m

3 YEAR ANNUL PERFOMANCE PLAN Programme 3: To enhance the quality and accuracy of credit bureau information. Goal/ Outcome Output Performance Indicator/ measure Estimate Performance Medium Term Targets 2014/15 2015/16 2016/17 2017/18 Number of credit bureau audited Reports reviewed and appropriate enforcement action taken where necessary. 14 credit bureau audited reports reviewed. reviewed and appropriate R10.3m R11.5m R12.3m R9.6m

3 YEAR ANNUAL PERFOMANCE PLAN Goal/ Outcome Output Performance Indicator/ measure Estimate Performance Medium Term Targets 2014/15 2015/16 2016/17 2017/18 Number of credit bureau audited Reports reviewed and appropriate enforcement action taken where necessary. 14 credit bureau audited reports reviewed. reviewed and appropriate R10.3m R11.5m R12.3m R9.6m

Quarterly Milestones for Programme 3 Goal/ Outcome Output Performance Indicator / measure Baseline 2015/16 Annual Target Quarterly Milestones 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Improved consumer credit information. Increase compliance by credit bureaus in respect of Number of investigated and appropriate enforcement action taken where necessary. 2 credit bureaus Draft Terms of Reference. Appoint Service provider and commence investigation. Continue with investigation and finalise. Take appropriate action where R16m R0.500m R2m R9m R4.5m Number of credit bureau audited reports reviewed 14 credit bureau audited reports reviewed. reviewed and appropriate necessary Review auditors reports from credit bureaus. enforcement action where necessary in terms of the audit reports. Continue to take appropriate R10.3m R1.5m R3.15m R2.5m

3 YEAR ANNUAL PERFOMANCE PLAN Programme 4: To improve NCR’s operational effectiveness Goal/ Outcome Output Performance Indicator/ measure Estimate Performance Medium Term Targets 2014/15 2015/16 2016/17 2017/18 Efficient service delivery. Improve operational efficiency through automated processes. % of uptime availability of the IT system. Implementation of recommendations of the ICT assessment. 95% uptime of the IT system. 96% uptime of 97% uptime of R44.1m R42.8m R46.3m R50.1m

Quarterly Milestones for Programme 4 Goal/ Outcome Output Performance Indicator / measure Baseline 2015/16 Annual Target Quarterly Milestones 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Efficient service delivery. Improve operational efficiency through automated systems % of uptime availability of the IT system Implementation of recommendations of the ICT assessment 95% uptime of the IT system. R42.8m R9.8m R10m R10.9m R12.1m

3 YEAR ANNUAL PERFOMANCE PLAN Programme 5: To ensure effective implementation of the National Credit Amendment Act (NCAA) Goal/ Outcome Output Performance Indicator/ measure Estimate Performance Medium Term Targets 2014/15 2015/16 2016/17 2017/18 Improved compliance with regulations and consumer protection Improve awareness and Number of workshops conducted with relevant stakeholders. 30 workshops stakeholders and monitor compliance with the NCAA. R9.3m 40 workshops R10m 45 workshops R10.8m 50 workshops R11.2m multimedia awareness campaigns (radio/ TV/interviews/ news print) conducted. 18 of any of the following: Radio TV Interviews News print and monitor R2.3m 30 of any of the following: - Radio - TV - Interviews - News print R2m R2.1m R2.5m

3 YEAR ANNUAL PERFOMANCE PLAN Programme 5: To ensure effective implementation of the National Credit Amendment Act (NCAA) Goal/ Outcome Output Performance Indicator/ measure Estimate Performance Medium Term Targets 2014/15 2015/16 2016/17 2017/18 Improved compliance with regulations and consumer protection Improve awareness and Number of outreach programmes and exhibitions (mall activations/ Outside Broadcast/ Roadshows/ Imbizos) conducted. 5 of any of the following activities: Exhibitions Mall activations Outside Broadcast (OB) Road shows and monitor compliance with the NCAA. R1.6m 8 of any of the following: - Mall activations/ exhibitions/ OB/ Road shows/ Imbizos in peri urban and rural areas. R1.55m 11 of any of the following: -Mall activations/ exhibitions/ OB/ Road shows/ Imbizos in peri urban and rural areas. R1.75m 15 of any of the following: - Mall activations/ exhibitions/ OB/ Road shows/ Imbizos in peri urban and rural areas. R2m

3 YEAR ANNUAL PERFOMANCE PLAN Programme 5: To ensure effective implementation of the National Credit Amendment Act (NCAA) Goal/ Outcome Output Performance Indicator/ measure Estimate Performance Medium Term Targets 2014/15 2015/16 2016/17 2017/18 Improved compliance with regulations and consumer protection Conduct special investigations and appropriate enforcement action taken where necessary Number of raids conducted and appropriate Conduct 2 raids in one province and take appropriate action where necessary. Conduct raids in three (3) provinces and necessary in four (4) Conduct raids where necessary. R1.6m R1.55m R1.75m R2m

Quarterly Milestones for Programme 5 Goal/ Outcome Output Performance Indicator / measure Baseline 2015/16 Annual Target Quarterly Milestones 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Improved compliance with regulations and consumer protection Improve awareness and compliance Number of outreach programmes and exhibitions (mall activations/ Outside Broadcast/ Road shows/ Imbizos) conducted. 5 of any of the following activities with special focus on peri urban and rural areas: Exhibitions Mall activations Outside Broadcast (OB) Road shows Imbizos and monitor compliance with the NCAA. 8 of any of the following: Exhibitions/ OB/ Road shows/ Imbizos in peri urban and rural areas. R1.55m 2 R0.225m R0.550m

Quarterly Milestones for Programme 5 Goal/ Outcome Output Performance Indicator / measure Baseline 2015/16 Annual Target Quarterly Milestones 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Improved compliance with regulations and consumer protection Conduct special investigations and take appropriate enforcement action where necessary. Number of raids conducted and appropriate enforcement actions taken where necessary. Conduct 2 raids in one province and Conduct raids in three (3) provinces and where necessary Planning and information gathering. Conduct 1 raid in one province and appropriate action taken where necessary 1.55m R0.550m R0.225m

BUDGET FOR THE 2015/16- 2019/20

POSSIBLE CHALLENGES FOR PROGRAMMES 1-5 Possible reckless lending leading to over-indebtedness Low of non-response from registrants Inadequate reporting on the level of compliance from data sources i.e. accuracy, validity, meeting submission deadlines NCR presence in the rural & underserved communities Lack of understanding of the NCAA Inefficient service delivery Funding

REMEDIES FOR CHALLENGES TO PROGRAMMES 1-5 Compliance monitoring: Affordability assessment Targeted consumer awareness & education initiatives Coordination with other regulators Regular compliance monitoring of registrants and enforcement of the Act Funding Challenge: to find creative ways to perform some functions: Consumer education & research; continue to engage dti; fees for new registrants Engagement with registrants & key stakeholders Improve operational efficiency through improved automated processes

Thank You! www.ncr.org.za