THE 2019 NATIONAL CREDIT AMENDMENT ACT, UNPACKED

This article is based on one that appeared in the 20 August edition of Legalbrief Today, under Policy Watch

The controversial, recently gazetted 2019 National Credit Amendment Act – paving the way for the introduction of long-term debt intervention measures for qualifying consumers but not yet in force – has sparked outrage in some quarters, mainly because of provisions perceived to constitute the deprivation of property (Business Day). However, according to an opinion sought from Advocate Wim Trengrove by former members of the National Assembly’s Trade & Industry Committee, while the Act does indeed allow for this, the provisions in question do not amount to the arbitrary deprivation of property and are therefore ‘permissible and lawful under section 25(1) of the Constitution’. The version of the Bill on which Trengrove’s opinion was sought was later revised to address other issues he raised at the time.

Once operational, the new piece of legislation will provide not only for the ‘suspension or part-suspension of a credit agreement’ and ‘an alteration or extension of that suspension’, but also for ‘the extinguishing of the whole or a portion of the total of the amounts contemplated … under a qualifying agreement’. This is according to the committee report that accompanied the Bill to the House for a second reading. The term ‘debt intervention applicant’ will refer to anyone whom – at the time of applying – either receives no income at all (or whose monthly income during the preceding six months was less than R7500) and whose total unsecured debt does not exceed R50 000. When deemed appropriate, the Minister concerned will have the power to review and adjust these caps.

In addition, once in effect the new statute will require debt counsellors to report to the National Credit Regulator ‘any suspected reckless credit agreements’ identified when an over-indebted consumer applies for debt review; empower Magistrates’ Courts to lower the rate of interest, fees or other charges under credit agreements as a debt rearrangement measure; and enable the introduction of regulations for ‘targeted credit life insurance for all unsecured credit’, capped ‘lower than … existing insurance’. New enforcement measures will make it a criminal offence to intentionally misrepresent information when applying for debt intervention; engage in prohibited conduct in respect of credit agreements; and not to register as a credit provider, credit bureau, debt counsellor, payment distribution agency or alternative dispute resolution agent. Both the National Credit Regulator and National Consumer Tribunal ‘will require additional capacity’ to process the number of debt intervention applications likely to be made once these measures are in force. With that in mind, now that the Act has been gazetted, the necessary plans and related funding requirements can be finalised.