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The Portfolio Committee on Trade and Industry today adopted the Sub-Committee report on measures to address debt, which recommended the introduction of a Committee Bill on this matter.

The Sub-Committee, in its report to the Portfolio Committee on Trade and Industry, said the Bill aims to amend the National Credit Act of 2005 so as to provide for simpler and more rigorous enforcement of the Act and criminal prosecution of lenders who contravene the Act.

It further aims for an effective debt counselling framework for low-income workers and capped debt relief to promote a change in the borrowing and spending habits of an over-indebted society. The Chairperson of the Sub-Committee, Mr Adrian Williams, said the new provisions will provide great relief to over-indebted South Africans and further limit the widespread abuse of consumers by unscrupulous lenders.

The Committee held several engagements with various stakeholders regarding the extent of over-indebtedness, its socio-economic impact on society and measures that could provide debt relief. During these hearings, the Committee heard that at the end of June 2016, a total of 24.08 million consumers were credit active, 14.41 million consumers were in good standing while 9.67 million had impaired records. Consumers with impaired records account for approximately 40% of the credit active consumers.

Issues highlighted during these engagements included retrenchments, consumers who are ill-informed about credit, the obligations and costs accompanying credit, credit life insurance and reckless lending.

Mr Williams said although the Bill introduced by the Committee may not address all these challenges at this stage, the Committee is requesting permission to introduce a Committee Bill that will address the most critical gaps identified.

He said any caped debt-relief measure will have financial implications for the State with regards to administering the process. However it is envisaged that the result of caped debt relief is short-term and will have long-term beneficial consequences for the economy.

Portfolio Committee on Trade and Industry Chairperson Ms Joanmariae Fubbs welcomed the report by the Sub-Committee and said: “Whatever the Committee does (regarding debt relief) cannot encourage reckless lending or irresponsible borrowing. The intention of this draft legislation is to encourage a change of behaviour on the part of both lenders and borrowers.”

The Committee will now seek the permission of the National Assembly for the introduction of legislation, the National Credit Amendment Bill of 2016.

Issued by Parliamentary Communication Services on behalf of the Chairperson of the Portfolio Committee on Trade and Industry, Ms Joanmariae