Law to target gung-ho lenders

TOUGH: RECKLESS LOANS COULD BE WRITTEN OFF

Many retailers are breaking law on massive scale, says Credit Rescue.

Reckless lenders could find themselves on the wrong side of the law when new legislation comes into effect.

Credit providers, including micro-lenders, retailers and even banks, who grant loans to over- indebted customers, could be tar­geted.

Major credit providers have been served notice that if they lend money to overindebted con­sumers, these loans may be writ­ten off and criminal steps taken against the directors of such companies.

Under the National Credit Amendment Bill currently before parliament, the national credit regulator (NCR) will oversee credit-providing institutions.

The regulator will not only have the power to investigate reckless lending, but to declare agreements between lender and debtor null and void.

Credit Rescue CEO Neil Roets has welcomed the amendment, saying it was long overdue.
Roets said many retailers and other credit suppliers were break­ing the law on a massive scale by lending money to overindebted consumers.

“We see examples of this on a daily basis, with individuals who approach us for debt counselling in order to be placed under debt review. It is patently obvious in many cases that reckless lending had taken place,” Roets said.

The department of trade and industry (DTI) is contemplat­ing giving further powers to the regulator to conduct proactive investigations and to impose ad­ministrative fines on perpetra­tors. The trade minister will be empowered to provide debt relief mechanisms, including extending measures to forgive debt.

Roets said the existing legisla­tion did not give the NCR the pow­er to conduct proactive investiga­tions.

NCR CEO Nomsa Motshegare said the issue of debt forgiveness was under discussion and would include students and retrenched workers who might have their loans written off.

She said that at the end of June, total outstanding consumer cred­it balances stood at R1.66 trillion, a 2.3% increase year-on-year.

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