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 Usury Act, No. 73 of 1968 (with Exemption- To be repealed Notice), regulates lending and lending rates 2.Credit Agreements Act, No. 75 of 1980, - To be repealed regulates HPs 3.Magistrate’s Courts Act, No. 32 of 1944,- To be retained, subject to regulates collection of debt remedies under this Bill 4.Common law- To be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