Impaired credit history set for cleanup at Bureaus
According to Trade and Industry Minister Rob Davies, local consumers with paid-up judgments at credit bureaus are set to have their adverse records removed starting on April 1, 2014.
According to Trade and Industry Minister Rob Davies, local consumers with paid-up judgments at credit bureaus are set to have their adverse records removed starting on April 1, 2014.
The Department of Trade and Industry published a notice on Wednesday setting out the process to be followed to ensure people who have paid their debts are no longer blacklisted. This has prevented many from finding jobs, rental accommodation and access to credit.
The regulations did not mean people who did not pay their debts would be automatically cleared.
Trade and Industry Minister Rob Davies said on Thursday that the current system did not prevent reckless lending as lenders generally failed to conduct proper affordability assessment and instead relied on credit bureau information.
Credit bureau statistics indicate that half of the 21-million credit-active South Africans are credit-impaired. But this statistic includes people who have paid their debt but have not gone to court to have judgement rescinded.
Mr Davies said it was not an amnesty on the debt people owed. "You have to pay back your debt … but we do not think the current system is adequate to prevent reckless lending and to protect individuals who are affected."
In future, people who had paid their debts would be automatically removed from credit bureau records. "We need to clear the slate as we introduce a new system through the National Credit Amendment Bill," Mr Davies said.
The bill was presented to the National Assembly on Thursday and will probably go before the National Council of Provinces late next month.
The notice gives credit bureaus two months to clear their records of people who have paid their debts and have been adversely classified as "slow paying", "absconded" or "not contactable".
Credit providers must submit all information relating to paid-up judgments to all registered credit bureaus within seven days of receipt of such payments from the consumer. Those who have not submitted it by April 1 will have seven days after that date to do so.
After two months, credit bureaus will have one month to submit an audit report by an independent auditor to the National Credit Regulator. It will confirm that all adverse consumer credit information and information relating to paid up judgements has been removed.
The regulator will have three months to report back to the minister of trade and industry on the effectiveness and compliance with the notice.
Zodwa Ntuli, deputy director-general of the department, said it had had "constructive engagements" with credit bureaus, which gave it a better understanding of the practicalities of the process. The Department of Justice, the Treasury and trade and industry were putting together measures to ensure abuse of garnishee orders was stopped.
The new measures would be published soon.
Ms Ntuli said a study conducted at one of the mines showed that 70% of all the garnishee orders could not be verified and were subsequently cancelled. Garnishee orders were an instrument of the law, but abuse had to be prevented.
