The Removal of Adverse Credit Information from the country’s credit bureaus will in no way result in the wiping off of credit profiles of consumers. The credit providers will still have the history of the consumers to enable them to conduct affordability assessments.
This was emphasised by the Deputy Director of Consumer Law and Policy at the Department of Trade and Industry (the dti), Mr Klaas Mokaba. He was speaking to members of the public and stakeholders at a public consultation session that was hosted by the dti in Polokwane yesterday.
The purpose of the national consultation process, which has seen the dti hosting sessions in seven other provinces in the past weeks, is to solicit inputs and comments on the proposed removal of adverse credit information from all stakeholders in the credit industry.
“The aim of this round of what is generally known as credit amnesty is to remove adverse or negative credit information which has prevented many people from accessing credit. It is no way intended to cancel the debts of consumers,” emphasised Mokaba.
He added that the credit amnesty was further intended to remove barriers to credit and assist those consumers who can afford credit, to access it. It also aims to reduce credit impairment by addressing its causes, and assist consumers impacted by economic recession. It will also remove barriers to employment, stimulate economic growth and redress failure of credit providers to consider broader economic factors when extending credit to consumers.
This project was undertaken because credit is a key enabling mechanism for investment and development in any country. Failure to facilitate widespread access to credit often results in significant opportunity cost to entrepreneurs and the wider economy.
Credit spurs consumer spending which is a key driver of economic growth. Therefore, inaccessible or expensive credit hinders growth. Access to a sustainable credit market is essential to all development goals," said Mokaba.
Most members of the public and stakeholders who spoke during the consultation, expressed satisfaction and optimism that the removal of adverse credit information would go a long way in assisting them to access credit. This was after various misconceptions about the proposed amnesty were clarified.
Participants were also reminded about their responsibilities when it comes to accessing credit. These include providing credit providers with correct information to enable them to conduct accurate affordability assessments. Conducting affordability assessment is a duty to both the credit provider and the consumer. Failure to do that by the credit provider may amount to reckless lending and therefore to a circle of over indebtedness.
Mokaba said when it becomes law, the amnesty will result in the removal of all adverse information listings irrespective of value and irrespective of non-payment. Paid-up debt results in the removal of adverse information on an on-going basis. Paid-up debts should result in removal of credit judgments on an on-going basis. The study has shown that more than 1.6 million consumers will benefit from the amnesty immediately. However, other researches have put the figure at more than four million.
Mr Vusi Ntuli, from the National Youth Development Agency, making a contribution during the public consultation on the Removal of Adverse Credit Information Project at the City Library in Polokwane.
Sidwell Medupe, Departmental Spokesperson
Tel: 012 394 1650
Cell: 079 492 1774
E-mail: MSMedupe@thedti.gov.za
Follow us on Twitter: @the_dti
