The National Credit Act 34 of 2005, the purpose of which is to protect consumers and promote a fair yet competitive credit industry, has been slightly lacking in regard to its ability to protect consumers.

With the advent of the ‘Removal of Adverse Consumer Information and Information Relating to Paid Up Judgments Regulations’ however, which will come into effect on the 1st of April 2014, certain omissions in the Act have been constructively dealt with.

The Act stipulates, under section 70, that your “consumer credit information” involves, to name just a few:  your credit history, including applications for credit, credit agreements you have entered into, whether you are in default under those credit agreements, judgments or the threat of judgment under those agreements, your financial history, including past and current income, assets and debts, your education, employment, career, professional or business history, and all of your personal information, for example where you live, if you’re married and how etc.  All the initial information you have given your credit provider (quite substantial, especially when the credit requested is high) will be listed with the credit bureaux, together with any subsequent information regarding your conduct under the agreement with that credit provider.

Credit providers such as banks, on whom probably, 90% of the population are dependent for credit, have access to this information.  Consequently, ignorance of section 70 has seen many individuals unwittingly listed with the credit bureaux and potentially struggling to obtain credit when they have defaulted on a credit agreement.

Although the Act does allow for the removal of a judgment listing from the bureaux, the judgment must have been paid in full or at least to the credit provider’s satisfaction and only if the judgment has in fact been rescinded by a court of law.  A rescission application can be both costly and time consuming.

The Department of Trade and Industry’s silver lining for people struggling to obtain credit is now at hand.  The regulations envisage a two stage process, one relating to a ‘once off removal’ and the other an ‘ongoing removal of information’.  The former refers to the removal of negative classifications, such as 'default', 'delinquent' or 'slow paying' and adverse listings such as ‘written off’ or ‘handed over’.  The latter requirement applies where all paid up judgments and adverse information listings will be removed on an on-going basis.  Both stages are automatic and no application by the individual is necessary.

In summary, whilst access to credit in this country is encouraged and the department’s regulations are welcome, credit providers must now ensure they are particularly vigilant when extending credit.

Written by Megan Gedye, an Associate in the Litigation Department of Garlicke & Bousfield Inc

For more information contact Megan on telephone : +27 31 570 5415, cell : +27 83 637 1833, email : megan.gedye@gb.co.za

NOTE: This information should not be regarded as legal advice and is merely provided for information purposes on various aspects of litigation.