1. Consumer And Corporate Regulation Division
PRESENTATION TO PORTFOLIO COMMITTEE OF THE DEPARTMENT OF JUSTICE AND CONSTITUTUTIONAL DEVELOPMENT (DOJ)
24 AUGUST 2016

2. MacDonald Netshitenzhe
Presenter
MacDonald Netshitenzhe
Acting DDG: the dti

3. INTRODUCTION Introduction
Consumer protection legislation was fragmented all over government departments and as well as the courts` approach. There was Usury Act, the Credit Agreements Act, Merchandise Marks Act and the Magistrates Court Act. In 2004 the Department of Trade and Industry (the dti) started a reform on consumer protection legislation. Consumer Protection Act and the National Credit Act became a product of those reforms.
The Magistrates Court Act needs to be amended to be in line with the NCA
This also applies to the Debt Collectors Act, Prescription Act, etc
The Department of Social Development should also curb deductions of social grants
There is a need for coordination of all these pieces of legislation in order to ensure proper redress to consumers.
the dti and DOJ have established the Task Team to address the issue of coordination. the dti is in supportive of the current amendments that the DOJ is undertaking

4. Laws that affect consumers
LEGISLATION
Laws that affect consumers
1. National Credit Act
2. Consumer Protection Act
3. Prescription Act
4. Attorneys Act
5. Magistrates Court Act,
6. Debt Collectors Act and
7. Social Assistance Act.

5. Over-Indebtedness
Research conducted highlighted the following concerns
Reckless lending
Gap in affordability assessment
Abuse of credit insurance
High cost of credit
Judgments and garnishees
Lack of education and awareness about credit
Listing requirements
Discretionary credit guidelines
Honesty and disclosure by credit providers and consumers

6. Over-Indebtedness and some of the contributing factors
DOJ is currently aligning its legislation to the reforms that have taken place in SA.
These reforms include the Consumer Law Reform which led to Consumer Protection Act and the National Credit Act, and the Corporate Law Reform which resulted in the Companies Act. The other reform that is current is the Intellectual Property Law Reform, which will amend Copyright Act, Performers Rights Protection Act, Patents Act, Trade Marks Act, Designs Act, Counterfeit Goods Act, and the Merchandise Marks Act.

7. Over-Indebtedness and some of the contributing factors
Over and above aligning the legislation, there is a need for the court system to be responsive to the new approaches.
This must include increased capacity in commercial crimes courts to deal with most criminal violations arising from the legislation.

8. Issues in respect of the Magistrate Court Act
Prohibition not to collect debt that has prescribed.
Consent to jurisdiction to be align to NCA section that makes it unlawful to require the consumer to consent to jurisdiction in the area that that they do not reside in
Align issue of service of notice with NCA changes
Before EAO/garnishee orders are issued, a proper affordability test must done to determine affordability on the part of the already defaulting consumer
Courts should consider a certain percentage (%) of interest that can be charged for incidental credit as these are most of the matters that are brought to court for default judgment and garnishee orders.
The NCA prohibits reckless lending, therefore, courts must be mindful that any credit matter referred to them is likely to be as a result of reckless lending. Hence the need to enhance the requirements relating to access to default judgement orders or EAOs.

9. Issues in respect of the Magistrate Court Act
WHAT THE DTI HAS DONE RECENTLY ON THE CREDIT SPACE
Put into legal force the Credit Amendment Act, 2014
National Credit Regulations including affordability Assessment regulations- effective 13/3/2015 (ARR postponed until 13 September 2015)
Minister has consulted with the Minister of Finance on Credit Life Insurance Regulations to issue them as final regulations.
Published final Regulations on the Limitation of interest rates and fees in November 2016 and came into force on 6 May 2016
Publishing final Notice determining a new threshold for registration for all Credit Providers (including loan sharks) in May 2016.

10. Issues in respect of the Magistrate Court Act
WHAT THE DSD HAS DONE RECENTLY
DSD has prohibited deductions of social grants and the Constitutional Court confirmed.

11. Issues in respect of the Magistrate Court Act
THE MAGISTRATE COURTS AMENDMENT BILL TO TAKE COGNISANCE OF THE FOLLOWING DEVELOPMENTS I.T.O NCA
Automatic removal of adverse information
Reckless lending ( investigate powers)
Debt review
NCT ( Prosecution of reckless lending)
NCAA ( prescription of debts- collection)
NCAA: Buffer – Table for necessary expense Norm
Section 17 (4) enforcement effort, co-operation, Registrar of Banks
Micro lenders: Regulation fees on thresholds
Payment Distribution Agents section 44 A of the NCAA
ADRS: Fee charging or no fee charging- regime to be developed

12. Issues in respect of the Debt Collectors Act
Integrate the prohibition for debt collectors to collect expired debt, as well as the prohibition on selling of prescribed debt.
The debt collection to be regulated strictly, and all role players, including lawyers to be subjected to the Debt Collectors Act.
There are compelling reasons to subject everyone that handles this work in the same way that lawyers that are debt counsellors are subjected to the NCA.
Self regulation of lawyers should be left to issues of their conduct, not that they are carved out from requirements such as price regulation to protect consumers from exorbitant charges that lead to their further indebtedness.

13. Issues in respect of the Prescription Act
Amend the Act to deal with processes and notices for prescription, or interruption of prescription.
Prescribed debt should not be capable of being collected.
The provisions that talk to admission or acknowledgment of debt should be more specific to take into account the literacy level of consumers.
The fact that a debt collector, or someone that has purchased debt can interrupt prescription by merely calling a consumer and get them to acknowledge a debt is harmful.
Most consumers are made to acknowledge debt that they are not aware of, most times they don't know the person calling them as the debt has been sold off or collection has been outsourced
The amount the consumers is made to acknowledge are often far much higher than the original debt with unregulated costs added thereto, and this loophole leads to a consumer being forever indebted.
Thus the prescription act must recognize developments in debt collection, and close the loophole that exist regarding interruption of prescription.

14. The dti Policy Approach
Consumer Protection
Consumer Protection Act
National Credit Act
National Norms for consumer protection
Fair and sustainable market place for consumer products
Consumer information and disclosure
Unfair marketing and business practices
Responsible consumer behavior
National Consumer Commission (NCC)
National Norms for consumer credit
Access to consumer credit
Unfair credit marketing practices
Responsible credit granting and use
Debt counselling and reorganisation
Consumer Credit Information
National Credit Regulator (NCR)

15. The dti Policy Approach
Amendments to NCA
Reckless Lending
Improved regulation
Affordability Assessment Regulations
Powers of NCR to investigate reckless lending
Power of NCT to deal with reckless lending
Disclosure of total cost of credit and capping of credit insurance
Prohibition of sale and collection of prescribed debt
Automatic removal of adverse of adverse credit information
All credit providers to be registered irrespective of size
Standard of service and procedures for debt counselors
Framework for Payment Distributing Agencies
Improved coordination and cooperation among regulators
Registration of Alternative Dispute Resolution agents

16. Wayforward
Amend:
Magistrate Court Act (Supporting the Court of Laws Amendment Bill)
Deal with Garnishee Orders
Magistrates should consider the application of the Affordability Criteria when granting Garnishee orders/EAOs
Debt Collectors Act
Attorneys Act in relation to debt collection
Prescription Act
Work more closely with DOJ, especially to ensure alignment on matters relating to enforcement such as penalties etc.

17. Wayforward
The justice system should support all legislation that should be applied by the courts, which means the reforms in the country should be reflected in court processes and rules.
The system should also be enhanced to allow courts, the DOJ to be able to transmit information required regarding administration orders, garnishee orders, rescission of judgments, maintenance orders, orders for delinquent directors, so that regulatory agencies can maintain the relevant registers. This will also help with accuracy of information held by credit bureaus.
DOJ must create the institutional framework for overseeing the implementation of legislation that fall under their administration. Currently most is left to courts, whose job is not oversight, and this leaves poor citizens with prejudicial court judgments.
DOJ institutions that should oversee implementation should promote access to justice and reduce the cost thereof for ordinary citizens.
The court system should not continue to be an avenue for the rich against the poor, as is often the case with credit matters that go to court. Often the ordinary citizen has no financial means to access the court system, even where they have the literacy level to comprehend what is at stake.

18. Conclusion
The Magistrate Court Amendment Act (now a Bill) must be aligned with the National Credit Act, the National Consumer Protection Act and immediate legislative reforms are required in respect of the Debt Collectors Act, Attorneys Act, and the Prescription Act. These reforms will ensure that consumers are treated fairly and would reduce over indebtedness that has suppressed economic activities and growth in South Africa.

19. THANK YOU