Debt Relief Bill: 13 Fast Facts

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debt-1157824_960_720We explore details around Government’s recently signed National Credit Act amendment, which aims to free low-income earners of crippling debt.

pbVerify Business customers who extend credit to consumers are urged to strengthen their KYC procedures to not only ensure legislative compliance, but also to protect them against potential financial losses.

This comes after a recent amendment to South Africa’s credit act, which has highlighted the importance of responsible credit lending.

Just over two months ago, the National Credit Amendment Bill – broadly dubbed the “Debt Relief Bill” – was signed into law and, although it has been almost two years since Parliament’s portfolio committee on trade and industry initiated the amendment bill, there are still uncertainties around its implications.

Also known as the Debt Intervention Bill, the bill basically aims to protect low-income earners from what government considers reckless credit lending, allowing consumers who are burdened by debt to have it written off.

While the bill has been welcomed by consumers, around 9.4 million*[7] of whom may qualify for debt relief thanks to it now having been signed into law, it has been met with “extreme concern” by others, including the Banking Association of South Africa (BASA), which said in a statement on 16 August, “The Act, in its current form, will restrict ability of banks to lend to this vulnerable market and increase the cost of credit.”

Treasury estimated government’s debt-relief proposals could result in the write-off of R13.2bn to R20bn of debt.

In response to concerns raised, President Cyril Ramaphosa said the bill and its proposals were within the country’s constitution. Business Day cites Ramaphosa as saying that, regulations and certain provisions notwithstanding, the law is constitutional.

Here are some fast facts relating to the debt relief bill and debt in South Africa to help demystify the controversial piece of legislation:

  1. The National Credit Amendment Bill was signed into law on 15 August 2019.
  2. The Debt Intervention Bill is an amendment to the National Credit Act.
  3. The bill’s primary aim is to provide relief for South Africa’s vulnerable and most financially distressed consumers.
  4. There is no date set yet for the bill to come into operation.
  5. According to the bill, indebted consumers must meet the following criteria in order to have debt extinguished:
    1. They must earn a gross monthly income of R7 500 or less.
    2. They must have unsecured debt amounting to R50 000.
    3. The National Credit Regulator (NCR) must have found them to be critically indebted.
  6. The bill also makes it an offence for a person to intentionally submit false information related to debt relief.
  7. The bill will inevitably result in losses for banks, retailers and other credit providers.
  8. TransUnion’s Q2 quarterly Industry Insights Report shows a significant increase in the amount of credit being taken out by consumers (Unsecured lending was recorded to be up by 12% in the second quarter).
  9. BASA petitioned Ramaphosa in August not to sign the Act in its current form.
  10. According to BASA, existing debt relief measures have proven to educate and rehabilitate debtors and return them to the credit market. “In 2017, banks expunged R30 billion in prescribed debt in line with existing legislation and their own policies.”
  11. Following a government-commissioned study by consulting firm Genesis Analytics, it was suggested that Parliament reconsider the passage of the bill in its current form, and rather introduce the debt-intervention system within the bounds of the current debt-review system, with subsidy mechanisms for low-income consumers.
  12. According to the Genesis Analytics study, it is unlikely that the introduction of law will have a significant economic impact at a macro-economy level.
  13. The study suggests that the law will mostly benefit the informal credit market. On the other hand, the formal sector credit providers could lose about R3.9bn of existing credit book.

pbVerify is a registered Credit Bureau in terms of section 43 of the National Credit Act 34 of 2005. Its data-systems, data-security and data-processing protocols are audited annually in accordance with the NCA. pbVerify follows strict ISO9001:2015 quality management processes that are audited and internationally certified by TUV Rheinland Germany. pbVerify engineers are certified in ISO27001 IT Security Management.

Phone: +27 (0)10 300 4898

E-mail: support@pbverify.co.za

 

[REFERENCES]

  1. gov.za – National Credit Amendment Act 7 of 2019
  2. Government Gazette – National Credit Amendment Act 7 of 2019 PDF
  3. Fin24 – 5 questions on the ‘debt relief bill’ unpacked
  4. TransUnion – Q2 2019 Industry Insights Report
  5. Moneyweb – Unsecured lending up 12% – report
  6. The Banking Association of South Africa – NCA Amendment Act
  7. *Moneyweb – Close to 9.4m consumers may qualify for debt relief under new bill
  8. Business Day – Cyril Ramaphosa defends controversial debt-relief law
  9. Business Tech – Ramaphosa signs controversial new debt relief bill into law – Here’what it means for you

pbVerify bolsters risk management portfolio

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pbVerify qv4b pic

SA’s number one data bureau has added a new TransUnion product to help companies eliminate risk when it comes to choosing who they do business with.

As South Africa’s number one data bureau, pbVerify is constantly striving to put the power of knowledge and sound decision making in the hands of local businesses.

To this end, we have bolstered our TransUnion Business Report with Quick Vet 4 Business (QV4B) – an instant online commercial credit vetting tool that will allow businesses to quickly and comprehensively make informed decisions with regard to the customers they onboard.

The new business score gives businesses an accurate overview in one quick view as to what the status of a potential business or customer is, without them having to go through the lengthy process of investigation and manual vetting. Via just one automated online process, businesses can now identify who the profitable and low-risk customers are, and move swiftly forward.

The latest addition forms part of pbVerify’s expansive range of credit risk management products, which come with a top-notch support system. Businesses can access all Credit Bureau products via one secure, efficient online platform.

“This new score is going to make the decision-making process a lot easier and quicker for our customers, and give them total peace of mind that they have made the right credit decision,” says System admin-support manager Sean Bennett.

Seeding success

Understanding and implementing risk management is absolutely crucial when it comes to the success of your business. In today’s volatile financial milieu, no company can afford to enter business deals with businesses that have questionable financial footing.

Unfortunately, too many honest businesses fall prey to dishonest or irresponsible parties that don’t fulfil their end of the business deal, whether it’s failure to repay a loan, defaulting on payments or being dishonest about credit histories, and this ends up hurting profits, productivity and reputation.

pbVerify takes the risk factor out of your business decisions with its risk management tools. And it couldn’t be easier to sign up. After registering for free, you will have instant access to detailed financial information, credit histories, public trace record information and more. There’s no monthly fee – you only pay per search.

pbVerify offers reports on individuals, companies, closed corporations, consumers and properties in South Africa.

For more information or to get in touch with one of our dedicated pbVerify support agents, go to www.pbverify.co.za.

 

Want financial freedom? Know your credit status

have-you-pulled-your-credit-report-yetDespite the country’s robust credit information industry, most South Africans do not know what their credit profile actually looks like.

It’s an all-too-common scene: you apply for an account at a retail store, and are taken aback when your application is declined on the grounds of bad credit. As far as you know, you’re the poster child for sound financial management – so what went wrong? Most likely, “as far as you know” is not far enough.

Sadly, even though South Africa has an incredibly strong credit information industry, many citizens are in the dark when it comes to what their credit profile actually looks like.

Earlier this month, local news site News24 cited African Bank executive Alfred Ramosedi as saying that many South Africans were “surprisingly unaware of the importance of a good credit profile”. What’s more, he said, many didn’t even know what a credit profile was – and in instances where they did know, they rarely checked their own personal credit profile.

And yet, the importance of managing your credit status – a task that begins with knowing your credit status – cannot be downplayed in today’s volatile economic climate. As Ramosedi rightly points out, many potential employers nowadays look at job applicants’ credit reports as a means of judging character and level of responsibility.

South Africa’s leading property website, Property24, lists bad credit records as the number one reason banks reject home loan applications, while car finance giant Carfin says the first thing you need to do if you’ve been declined for finance is “Find out why” – i.e. check your credit report. Step number two, says Carfin, is to improve your credit score.

No excuse

 The Credit Bureau Association points out that every single credit-active person in South Africa has a credit profile that shows how they manage their debts and accounts.

Fortunately, if you are a South African who wants to do the smart thing and familiarise yourself with your credit profile, you don’t have to climb any mountains to do so. On the contrary, our country’s credit information industry makes the process next to effortless for you. So much so, that there is really no excuse for not knowing your credit status.

On a scale of 0 to 8, South Africa ranks 7 on the World Bank’s Depth of Credit Information Index – a measure of the availability of credit information, where 8 is the highest level attainable by any country.

Additionally, according to the National Credit Act, every consumer has the right to one free credit report once in a 12-month period from the country’s main credit bureaus, namely TransUnion (formerly ITC), Experian, XDS and Compuscan.

A credit report is basically a comprehensive statement outlining your financial history and standing. It comprises information on your spending and borrowing patterns, how well you meet your financial obligations, general spending and payment trends and contact details. It also lists any judgment you may have against you, as well as any money owed to creditors.

MYpbVerify* – the most versatile personal credit check service on the Net – offers you this and more. The tool not only gives you instant online access to your personal credit report, it also allows you to customise your report with variable information.

MYpbVerify offers various pricing options to suit your needs. Depending on your status and credit history, you can choose either a Basic credit report, or a more advanced (Standard or Premium) report. The latter option includes directorship information, deeds data (properties owned), your personal Compuscan credit rating score and more.

This year, do yourself a great favour – get to know your credit status and start building a good credit profile today. Not only will you never have to fret about being turned down when applying for credit again, you will also be able to take advantage of the better repayment  terms that come with having a strong credit report.

*MYpbVerify™ is an online credit check system designed for consumers in need of quality personal credit check reports. The product offers three different credit reports, all instantly sent via email in PDF format once an order is completed. 

[REFERENCES]        

News24 – Ways to take control of credit

The Credit Bureau Association – http://www.cba.co.za/

The World Bank – Depth of Credit Information Index

Property24 – Why banks reject your home loan

Carfin – Have you been declined for vehicle finance?

 

Before you extend a line of credit, check the consumer’s credit report with pbVerify

pic2Due to recent reports that millions of people in South Africa are in debt, it’s critical that lenders check each applicants’ credit score in order to mitigate risk and avoid making a bad business decision. With pbVerify you’ll get access to consumer credit reports, be able to access applicants’ credit health and have all the information available to assist you in making smart business decisions.

What type of businesses can benefit from using pbVerify?

  • Credit grantors – Any Business selling on account. Check the credit worthiness  of each applicant and use it as as risk management tool, whether you’re lending to an individual or to another business.
  • Trace agents – In order to locate consumers who have defaulted, pbVerify gives you access to more than 30 million consumer records and our services are widely used by thousands of trace agents.
  • System integrators – In order to verify the identity of consumers in the retail and HR industries, use our ID API services and get full and complete Home Affairs information.
  • Estate agents and letting companies – Our credit check and deeds search services are widely used to assess prospective renters and to obtain information on property owners in South Africa.

»» More – How it works

Managing risk and properly assessing credit applicants is a vital part of any business that lends money to individuals or to other businesses. When you register with pbVerify you’ll be able to make smarter business decisions, protect your company and get the full and complete information on specific consumers before deciding on a plan of action.

For more information on obtaining a credit report from pbVerify please contact us today. We look forward to hearing from you!

How the deteriorating credit health affects South Africa’s retail sector

TransUnion’s Consumer Credit Index has declined to 43.6% in the second quarter of 2013 from 43.8% in the first quarter of the year. TransUnion, which is an international leader in credit and information management, says that this drop in the Consumer Credit Index (CCI) reflects a deteriorating consumer credit health. According to TransUnion, “Credit Health” refers to the ability of consumers to service existing credit obligations within the constraints of monthly household budgets.

retail“The fall in the CCI reflects escalating consumer loan impairments and sustained growth in distressed borrowing, both indicators of rising household financial stress,” explained TransUnion in a statement to the press.

What is the Consumer Credit Index?

The CCI is a unique indicator of consumer credit health based on a 100-point scale. Deterioration in credit health is represented by an index below 50.0 and an index above 50.0 indicates improving credit health.

“Consumer credit health has now been deteriorating for four straight quarters and the risk of deterioration in the credit cycle has risen materially,” commented TransUnion Africa President, Geoff Muller.

“Credit-sensitive retail sectors need to become increasingly vigilant to the risks this trend poses to their business,” said Muller.

How pbVerify can help

pbVerify, an innovative web service, is already helping many companies in the credit-sensitive retail sector. Our consumer tracing, credit check, ID verification and business credit check tools make it quick, affordable and easy to do the thorough research that is needed before taking on new clients.

“In a tough global economy, it becomes even more important for retailers to mitigate risks. A deteriorating consumer credit health – while not permanent – shows that companies need to be more vigilant with regards to issuing credit and making sure they’re on top of all consumer repayments,” says Leon van der Merwe, Business Development Manager and Anti-Fraud specialist at pbVerify.

If you want to find out how pbVerify can help your business mitigate risks, contact us today. We’ll give you a demonstration on how our system is helping hundreds of other South African businesses.

 

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MYpbVerify personal credit check website launches!

Your trusted name in credit bureau data systems, pbVerify is proud to launch the new online personal credit check website, MYpbVerify™ for private consumer credit reports. If you live in South Africa and want a secure, discreet and fast way to get your credit report, this is it!

MYpbVerify Girl

pbVerify and MypbVerify – Personal and Business Credit check

As the local leader in customer communication technologies, Pitney Bowes is excited to be able to launch this newly developed tool to the market.

Here’s what you need to know:

Your credit information is gathered by credit bureaus on a regular basis from various sources that have extended you credit. Retailers, banks, lenders, employers, landlords, and other credit providers have access to your credit records to assist them with credit risk management in deciding whether to grant you further credit, a loan, a credit card, new employment, housing, or to offer you new products and services.

As a consumer it is critical for you to know your credit status and always have a complete picture of your credit history and credit score.

The MYpbVerify™ premium credit report considers all possible influences that may exist on your credit rating and combines it into one, easy to read credit check report that gives you a full picture of your credit history and credit status in the market.

Basic, Standard and Premium Reports:

MYpbVerify™ not only gives you instant online access to your personal CREDIT REPORT, it allows you to customise your credit report with variable information and pricing options to choose from.

Depending on your status and credit history, you have the option to choose from a Basic credit report to more advanced options in the Standard and Premium reports that will include Directorship information, Deeds (properties owned) data, your personal Compuscore rating and more…

The most versatile personal credit check on the Net!

Contact our support line on 011 516 9400 or visit MYpbVerify today!

Make smart and informed Risk Management decisions with pbVerify

pbVerify Risk Management

pbVerify Risk Management tools

Understanding risk management is essential for the success of your business, as you don’t want to enter into business deals with individuals or other businesses that have sordid financial pasts. Unfortunately, too many honest businesses fall prey to dishonest or irresponsible parties that dont’ fulfil their end of the business deal, whether it’s failure to repay a loan, defaulting on payments or being dishonest about credit histories, and this ends up hurting profits, productivity and reputation.

If you haven’t heard about pbVerify, you’re missing out on an excellent risk management tool that’s been specifically designed for businesses like yours. After registering for free, you’ll have instant access to detailed financial information, credit histories, public trace record information and more. There’s no monthly fee and you only pay per search, and we can supply you with reports on individuals, companies, closed corporations, consumers and properties in South Africa.

What type of companies need a good risk management tool like pbVerify?

  • Credit Grantors (any business selling on account). Whether your business does business with other Businesses or with consumers or both, we have the perfect solution for you. Connect your business to instant, online access to credit and registrar information from all three major credit bureaus, CIPC (previously CIPRO) and Department of Home Affairs (DHA).
  • Real estate companies. Fully vet potential renters and tenants when you use pbVerify. Above all else, you want to be certain that you aren’t putting your business at risk by entering into a business deal with individuals who have a history of not fulfilling their financial obligations.
  • Trace agents. Our consumer trace service is connected to more than 30 million consumer records in South Africa! If you need to locate consumers who have defaulted, this is the service for you.
  • System integrators.  If you need to verify the identity of a consumer, our widely-used system is the perfect tool to help you do so.

Whether doing business with an individual or another business, you want to do everything you can to ensure that it’s a wise choice. pbVerify allows you to make an informed decision.

To get more information about pbVerify, please visit our website today!