IRRESPONSIBLE financial behaviour is rising again‚ signalling South Africans did not change their spending habits after the credit amnesty granted to deeply indebted consumers with adverse credit records that had aimed to offer consumers a clear slate‚ experts say.
Kirsten Halcrow‚ CEO of EMPS‚ the oldest background screening company in South Africa‚ said in a statement there has been a substantial increase in the number of negative listings for job applicants who were screened for potentially sensitive positions.
“Over the past 10 years job applicants with impaired credit records were running at between 20-25% before the credit amnesty was introduced.
“After the amnesty the percentage dropped substantially to around 10‚5%.
“It is now 16 months after the amnesty and the percentage is already up to 16% and climbing.”
On February 26, 2014 the Department of Trade and Industry published regulations for the removal of adverse listings from credit bureau records and these came into effect on April 1, 2014. All records relating to adverse consumer credit information including information on consumer behaviour‚ enforcement action and paid-up judgments had to be removed. SARS judgments are not removed. They are seen as criminal offences rather than financial defaults.
Halcrow said about 2.8-million consumers benefited from the amnesty.
“Credit records are not checked for all job applicants. When applicants are being considered for employment in a position that requires trust and honesty and entails the handling of cash or finances the regulations make provision for us to check their credit status.
“We consider it of vital importance that credit checks be carried out on individuals who are being considered for these job categories.”
Halcrow said: “One piece of advice that I can share with candidates who have adverse listings is to voluntarily have themselves placed under debt review. That will show a prospective employer that the job applicant has taken responsibility for their indebtedness and is doing something positive to change their status.”
According to the National Credit Regulator‚ credit bureaus hold records for 23.11-million credit-active consumers. Of these only 12.70-million are considered to be in good standing.
Neil Roets‚ CEO of debt management company Debt Rescue‚ said there was clear evidence that consumers had not changed their behaviour and that the credit amnesty had largely failed to change consumer behaviour.
“More than 50% of all consumers are three months or more in arrears.
“Many South Africans saw the credit amnesty as an opportunity to stack up new debt because their adverse listings had been removed and they were therefore eligible to borrow more money.
“It is my belief that we will be back to the pre-amnesty percentage of adverse listings within the next six to twelve months which will prove that the amnesty was an exercise in futility.”
He said the best way for consumers to get out from under their crushing debt burden remained the debt review option.
“Apart from the fact that the process offers legal protection against the seizure of their property by debt collectors‚ it also offers them the opportunity to pay back their debt in smaller instalments over a longer period of time.
“There is no doubt that the situation is deteriorating because we are seeing ever greater numbers of consumers approaching us to be placed under debt review‚” Roets said.