Consumer credit checks and the NCA

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Consumer credit checks

Businesses need to provide reasons for drawing consumer credit reports, in terms of the National Credit Act. 

If you are a credit provider of any kind, it is inevitable that you will frequently have to dig into the financial history of potential debtors.

pbVerify offers a range of Business to Consumer (B2C) credit check services*, which help businesses make better business credit decisions when assessing new debtors. As SA’s leading data bureau, we know that the better the information you have on your potential customers, the better your decisions will ultimately be.

At the same time, you need to be aware that the rights of the credit-seeking consumer are clearly enshrined in legislation, in particular the National Credit Act (NCA) No. 34 of 2005, and the onus is on you to make sure you comply.

Yes, as a credit grantor following good business practice, you have the basis for an enquiry into a potential debtor’s financial history (i.e. via a credit report) – but a consumer’s credit report is confidential and may not be accessed without legal grounds, or the consumer’s explicit permission.

These “legal grounds” are laid out in the NCA, in the form of prescribed purposes (the Act requires that you specify the reason you are drawing a credit report).

In this article, we will outline the rationale behind the NCA, and list some of the prescribed purposes it incorporates.

The purpose of the NCA

South Africa’s population consists mainly of lower LSM (Living Standards Measure) individuals with limited to no access to credit channels.

According to the Banking Association of South Africa, the complex nature of credit agreements has left many of the country’s consumers vulnerable and often exploited by credit providers.

“This led to the establishment of the NCA [which includes] mechanisms to protect consumers against unscrupulous lending and over-indebtedness.”

The NCA seeks to “promote and advance the social and economic welfare of South Africans, promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and to protect consumers.”

The association lists credit providers as banks, micro-lenders, retailers (e.g. furniture and clothing stores) and “all businesses, companies, close corporations, partnerships and individuals who do business on credit, provide loans or charge interest on overdue accounts; and who offer credit within the prescribed threshold values in terms of the [NCA] Act”.

Consumers, says the association, include both individuals (natural persons) and “certain juristic persons [e.g. companies, close corporations, trusts (with more than three individual trustees), partnerships and an association of persons] whose asset value or annual turnover, together with the combined asset value or annual turnover of all related juristic persons, at the time the agreement is made, equals or exceeds the threshold value of R1 million”.

Prescribed purposes

A credit bureau may issue you with a consumer’s credit report in terms of the NCA, under a number of prescribed purposes – including, but not limited to:

  • Account Management
  • Affordability Assessment
  • Alternative dispute resolution
  • Book Assessment
  • Consumer Enquiry
  • Credit Assessment
  • Credit Limit
  • Credit Ombud Enquiry
  • Tracing (non-credit provider
  • Debt Review
  • Education / Employment
  • Employment
  • Fraud Investigation
  • Fraud Prevention
  • Insurance Application
  • Marketing Services
  • Other Legislation
  • On consumer instruction/consent
  • Score Development
  • Tracing
  • Unclaimed Funds

The above are abbreviated descriptions. For the full description, explanation and NCA references, click HERE.

pbVerify’s B2C credit check suite and is available after registration to any business that grants credit to other businesses or consumers.

 

*pbVerify’s Consumer Credit Check services include the Transunion ITC Credit Check; Compuscan Credit Check; Experian Credit Check; XDS Credit Check; pbVerify Credit Check; and our recently added Express Credit Score product (See related blog here).

 

REFERENCES

  1. National Credit Act 34 (2005)
  2. The Banking Association of South Africa website
  3. IOL – Who may see your credit report?
  4. pbVerify blog – Credit vetting: an essential key to SME success
  5. Compuscan’s “Prescribed purposes for access to consumer data” guide

pbVerify introduces Express Credit Score

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SA’s number one data bureau has added a new, express credit check product to its B2C suite.

pbVerify has just expanded its Consumer Credit Check product suite with a new service that enables businesses to draw an express credit report in seconds, at less than half the cost of the full report.

Introduced in mid-November, pbVerify’s Express Credit Score enables businesses to view a condensed report of a consumer’s credit viability, and quickly determine whether or not further data on the consumer in question is necessary.

The service, launched in response to market demand, saves businesses the trouble, time and cost of drawing a full report on every consumer they investigate and allows them to quickly sift through credit candidates for potential clients.

Express Credit Score complements pbVerify’s original Consumer Credit Check, rather than replaces it. The express product offers basic information such as whether a consumer is a High, Low or Minimum risk consumer and – in the case of High Risk – what the main reasons are for the adverse score.

The full Consumer Credit Check report offers information businesses will only need to draw on if the consumer being investigated is deemed a risk, including contact and employment data, all adverse information (judgements, defaults and collections) and an enquiry list.

The full report costs between R35 and R45 (350 to 450 pbVerify credits) per report, while the Express Credit Score costs just R12,50 (125 credits). For a full breakdown of pricing click here.

NB: Businesses wishing to draw a credit report on an individual must have the consumer in question’s signed/written consent.

* pbVerify Express score is a credit bureau score developed in partnership with Compuscan using advanced statistical modelling techniques.

Experian Consumer Credit Report back online

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experian-consumer-credit-reportpbVerify has reinstated its Experian Consumer Credit Report, following a period of about four months of the service being offline.

The product, part of pbVerify’s comprehensive consumer credit check suite, was temporarily discontinued in July due to a system upgrade.

Experian is the world’s largest credit bureau operator, with local offices in Johannesburg, Cape Town and Durban. The bureau has a long history of protecting personal lending in South Africa’s financial services market.

The Experian Consumer Credit report forms part of the pbVerify Business to Consumer (B2C) credit check suite and is available on registration to any business that grants credit to consumers.

The report, garnered directly from Experian for pbVerify clients, provides extensive information – obtained from major credit providers and collection companies in South Africa – relating to individuals’ credit status.

Forewarned is forearmed

Business owners in South Africa are acutely aware that, in order to run a successful operation, they have to be on top of risk management.

Knowing who to do business with and who to avoid is critical and, in order to make an informed decision, it is essential organisations have access to extensive data.

pbVerify’s credit check services offer quick and complete information that ensures effective risk management, and are ideal for:

  1. Credit grantors. If you’re a business that grants credit accounts, you need a full report on potential clients’ credit history before you take a decision to grant them additional credit.
  2. Home loan companies. You want to ensure you are not granting a home loan to someone with a questionable financial past, who is likely to disappear – leaving you with the burden of their debt. pbVerify enables you to view a potential grantee’s financial information, and then make an informed decision.
  3. Micro-lenders. Even companies that solely grant small loans need to be certain that their borrowers are responsible and reliable. Before you sign that paperwork, run a potential borrower’s name through pbVerify and get an idea of who it is you’re dealing with.

For just R42 (420 pbVerify credits), the Experian Consumer Credit Report produces the following information on the consumer: Name; Address; Adverse credit information; Experian Delphi Score*; Mobile number; Landline numbers (personal and work); Employment/occupational information; Enquiry list.

pbVerify’s goal is to give businesses tools to protect themselves and make informed business decisions.

It is unfortunate, but true, that business owners fall prey to fraudsters every day. pbVerify arms businesses with the information they need to protect their future.

pbVerify will be adding other Experian products, like the Experian Business Credit report, to the menu in 2017.

NB: Businesses wishing to draw a credit report on an individual must have the consumer in question’s signed/written consent.

* Delphi Score is a credit bureau score developed in partnership with Experian using advanced statistical modelling techniques.