With the recent gazetting of the National Credit Amendment Act, 2014, the South African Institute of Chartered Accountants (SAICA) encourages people to familiarise themselves with the new amendments. These will improve the effectiveness of debt counselling, and therefore help many South Africans to settle their debt - while also aiding in preventing the reckless granting of credit by credit providers. 
The amendments provide for the alteration of the governance structures within the National Credit Regulator (NCR), to provide for the registration of payment distribution agents and to tighten measures relating to debt counsellors and the conduct of their practices.   
“The purpose of the National Credit Act (the Act) is to promote and advance the social and economic welfare of consumers, by promoting a fair and transparent credit industry and alleviating consumers from over indebtedness,” says Yusuf Dukander, SAICA’s project director for financial services. 

He points out that choosing the most appropriate credit facility or credit granting may appear simple, but it is important to understand the applicability of the Act, which applies to all written credit agreements between parties at arm’s length, and concluded within the Republic. The Act was introduced to facilitate new and protective rights for consumers for all type of credit agreements, ranging from micro loans to home loans, and from overdrafts to retail financing. Credit facility, credit guarantees and credit transactions fall within the Act.

Dukander observes that the collapse of African Bank Investments Limited (ABIL) has drawn widespread criticism from the public as well as shareholders, lenders and the regulatory authorities. “It appears the fallout was likely to burst.  Was the collapse due to poor risk management, or to bad luck?  Were there obvious errors of judgment, or was it simply blind optimism?  Was there a lack of oversight on key pieces of regulation and legislation?”
He  adds that “the Act was initially assented in 2005. It contributed to South Africa’s financial institutions, and specifically banks and credit providers, to better withstand the 2008 global financial crisis when global markets were in turmoil.  While lending by banks and credit providers remains at the heartbeat of stimulating our economy, consumers can also play a social and economically responsible role in curbing debt.” 
The National Credit Amendment Act is seen as a firm step by government to tighten up governance, accountability and the operations within the NCR. “It also serves as a measure to allow consumers to make more informed decisions before buying goods and services on credit.  In addition, it places greater responsibility on credit providers to refuse to give you credit if you cannot afford it,” says Dukander.

Contact:
Dikeledi Mogorosi, Communications Coordinator: Corporate, SAICA Communications & Marketing Division