The ANC welcomed the adoption of the National Credit Amendment Bill by the Portfolio Committee on Trade and Industry on Wednesday (29 August).
In a statement, the party said that it had introduced the bill to provide debt relief intervention for the marginalised poor.
This was motivated by the fact that the South African natural insolvency system remained largely creditor-oriented and excludes the poor from the process, which is contrary to international trends and best practice, it said.
“The current statutory measures offering debt relief (i.e. sequestration; administration and debt review) require some form of disposable income or assets that limit access by the poor on financial grounds,” it said.
“The ANC was of the view that this constitutes unfair discrimination based on socio-economic status and also undermines the dignity of affected consumers. These exclusions accordingly affect the equal enjoyment of rights as envisaged in Section 9 and the right to dignity as envisaged in Section 10 of the Constitution.”
According to the ANC’s statement, some of the changes that will be introduced include:
- There will now be a long-term intervention, similar to debt review, which will be administered and processed by the National Credit Regulator. This process will be free for the targeted group and the order will be issued by the National Consumer Tribunal.
- There is a short-term intervention that allows for the extinguishing of debt for those consumers who are either unable to pay their debts at all or to repay all the debt within 60 months. This intervention will be available for four years after the implementation of the bill. To qualify, a consumer must not have more than R50,000 unsecured debt, and earn no more than R7,500.
- The bill also gives additional powers to Magistrate Courts to lower interest rates based on a debt counsellor’s recommendation on behalf of a debt review applicant. In issuing regulations, the minister must consider the industry’s existing voluntary Task Team Agreement, especially the differentiation between secured and unsecured loans and the principle of incrementally and proportionally reducing interest rates, fees and other charges.
The bill will now be scheduled for adoption by the National Assembly.