1. BUSINESS PROCESS REVIEW BRIEFING 07-September-2009

2. 1992 Exemption Notice – Revised 1999. Government identified this as a critical issue to protect the consumer. The spring board was regulation of the Micro Finance industry. National Credit Act was promulgated in 2005 effective in 2006 National Credit Regulator established in June 2006 to be the custodian and ensure compliance with the Act. Why a National Credit Regulator

3. Development of an accessible credit market. Registration functions. Enforcement functions. Research and Public Information. Relationships with other regulatory bodies. Reporting requirements. Sections 13,14,15,16 and 18 of the Act.

4. National Credit Act - Scope, objectives NCA addresses the following issues: Improve disclosure; enforcement & redress; Prohibit unfair contractual practices; Regulate interest and fees; Reckless lending rules & debt counselling; Regulate credit bureaux & credit information; Exclude SMEs > R1m from Act & limited application to rest  to facilitate greater lending to SMEs National Credit Act Agreements & quotes Unlawful agreements, provisions Credit Bureaus National Credit Register Debt counseling Enforcement & debt collection Reckless lending rules Marketing & sales practices Interest & fees

5. Primary Areas affecting Governance of the NCR National Credit Act. Public Finance Management Act [New Bill in pipeline] Preferential Procurement Policy Framework Act. Broad Based Black Economic Empowerment Act. King II [King III]

6. NCR Financial performance 31 March 200931-March-2008 Income:61,335,96551,089,698 Fee income26,235,80518,168,734 Transfer Payment – Operational Activities.34,082,00030,811,789 Government Grant – National Register of credit agreements228,6981,401,143 Government Grant – Debt relief program202,355 Other Income607,107708,032 Expenses:52,832,33952,332,261 Operating expenses17,316,50218,360,493 Personnel Expenses25,691,41523,051,709 Administrative Expenses10,370,2389,546,361 Depreciation(412,645)(1,158,040) Amortization(146,935)205,080 Financial Charges13,76410,578 Surplus/(deficit) from operations before finance Income8,523,626(1,242,563) Finance Income6,185,1874,751,519 Net Surplus for the year14,708,8133,508,956

7. Statement of Financial Position 31 March 200931 March 2008 Assets Current Assets:62,234,78749,138,380 Cash and equivalents61,949,94848,873,829 Trade and other receivables284,839264,551 Non-current assets:6,635,2984,350,288 Property, Plant, and Equipment6,116,2094,117,039 Intangible assets519,089233,249 Total Assets68, 870,08553,488,668 Liabilities: Current liabilities30,900,91730,212,013 Amounts prepaid9,380,7849,887,975 Lease Obligation18,84473,059 Provisions2,264,9232,351,456 Deferred annual fees7,456,9604,586,061 Deferred Government Grant – National register of credit agreements180,159408,857 Deferred government grant – Debt relief programme5,797,6456,000,000 Deferred operating lease costs602,970409,987 Trade and other payables5,198,6326,494,618 Non current liabilities Lease obligation16,300 Total Liabilities30,900,91730,228,313 Net assets Accumulated surplus37,969,16823,260,355 Total net assets37,969,16823,260,355

8. Manager Registration Manager Credit Information Manager Research & Statistics Manager Complaints Manager Investigation & Prosecutions Chief Financial Officer Senior Manager Education & Strategy Manager Human Capital Board of Directors Chief Executive Officer Chief Operating Officer NCR’s Management Organizational Chart Total staff compliment = 81 Finance and ICT = 10Investigations and Prosecutions = 7Credit Info. = 1 Human Resources = 8Education and Strategy = 6Executive = 5 Registrations = 17Debt Counselling = 6 Complaints = 17Research and Statistics = 4 (Vacant)

9. Overview – Strategic Objectives and Operational Targets RegistrationEffective registration & compliance monitoringTargets, turn-around times & service quality monitoring Complaints resolutionInternal capacity & co-ordination with ombuds & provinces Turn-around times, call drop rates & monitoring; Quarterly meetings with provinces & ombuds; Investigations & prosecutions Effective & visible enforcement, prioritizing areas of significant consumer loss & impact No of cases, differentiating between type & size with completion & success targets Education & Communication Increase awareness of Act, of the protective measures & redress mechanisms No of workshops & media engagements; R-value of exposure; Annual impact assessment Debt counselingRegistration, training, monitoring & support; Establish payment distribution function & resolve legal uncertainty Targets for on-site visits, off-site monitoring & audits; Declaratory orders & regulations Statistics & ResearchRegular & credible statistics on credit providers & bureaus; Research on priority areas as per Act Targets for publication Defined research topics, with research programme HRRecruitment, retention & development of skilled & motivated staff Targets for recruitment, retention, & staff development programme Finance & ITCompliance with PFMA, control of expenditure; Effective IT systems Clean audit & strict budgetary control Targets for service & uptime

10. Credit Provider Statistics Overview of consumer credit market Approximately R1.1trillion consumer credit, provided to 17 million consumers & consisting of 36m accounts Registration 3,700 credit providers with 31,000 branches 11 credit bureaus, managed 22 audits, 16,8 m data removals Mortgages biggest category, “other secured” next biggest (m/vehicles & furniture) Banks 90% of total, non-bank vehicle 3%, retailers 3% Banks 90%

11. Number of credit providers registered as at March 2009 Category per type of Credit Provider Number of Credit Providers % Age Breakdown Banks Clothing Retailers Food retailers Furniture stores Co-operatives Housing Lenders Life Insurers Motor vehicle financiers Private colleges Securitization State Enterprises Universities Pawnbrokers Other short and long term financiers Total 25 9 3 21 32 11 16 120 15 60 12 5 159 3202 3690 1 0 1 0 1 3 0 2 0 4 87 100 Total principal debt = R1.1 trillion. Bank’s share of principal debt = R706 billion. Clothing and food retailers share of principal debt = R140 billion.

12. Overview of operations - Registrations. Applications Logged Credit Providers 4,264 Credit Bureaux 16 Debt Councillors 51 Credit Providers 5,547 Credit Bureaux 19 Debt Councillors 552 Credit Providers 6,244 Credit Bureaux 23 Debt Councillors 1,455 Applications approved3,968 - -3,696123614,57012920 Fully registered -8 -2,535113363,69011834 Work in Progress -5513,69612361 - - - Applications Withdrawn/ Cancelled 2963 -1,3397492,1939263 March 2007 March 2008 March 2009

13. Overview of Operations – Complaints Calls Received 111,812110,787102,426 Complaints resolved - 1,4781,379 Resolution Rate - 92%84% Interaction with provincial consumer desks. - All nine provincial consumer affairs offices Alternate dispute resolution mechanisms. - Banking ombudsman. FIAS Ombudsman Banking Ombudsman FIAS Ombudsman Credit Info. Ombudsman March 2007 March 2008 March 2009

14. Overview of Operations – Investigations Investigations Conducted 89 91 99 March 2007 March 2008 March 2009 Investigations & enforcement Priority = cases where consumers stand to loose their houses Various debt counselors being investigated

15. Education and Training and Debt Counselling Education and Training 32,000 (delegates) Provincial consumer desks, NGOs. Trade Unions, Employers, Industry stakeholders 37,873 (delegates) NGOs, Government, Trade unions, Employers, Industry Stakeholders Applications for Debt Counselling 8,96658,842 March 2008 March 2009

16. Operations Overview – Statistics and research Quarterly returns to be submitted Category 1 to 4 Quarterly reports Annual reports Quarterly Annual reports Annual Returns to be submitted Category 5 and upwardsAnnual compliance report - Major reports generated by the NCR Consumer Credit Report (quarterly production) Credit Bureaux Monitor (Quarterly production) Debt Counselling reports Credit Providers Credit Bureaux Debt Councillors

17. Progress since establishment Registered 3,700 credit providers with 31,000 branches & 11 credit bureaus Collected statistics & published reports on R1.1 trillion credit market, and on credit standing of 17 million consumers 215,000 calls since inception & 441,476 hits on website. 326 institutions investigated, with R16.8 million paid back to consumers Effective consumer education strategy with 861 workshops & media exposure to value of R93m. Awareness level of NCA at 67% with positive perception from all sectors Debt counseling major progress, with 900 counselors trained & registered & extensive programme of monitoring & support – distributions exceeding R94 million/month. But also major challenges, with credit provider resistance & uncertainty on magistrate court procedures. Completed research on: SME access to finance; Impact of NCA on cost of credit; Levels of indebtedness; Impact of financial crisis. Feasibility study on Register of Credit Agreements completed, ready for implementation.

18. Questions