The colour of money
Last week was a bad week for the country’s credit regulators. First up was the constitutional court’s ruling on emolument attachment orders (EAOs), which highlighted flaws in the legislation that resulted in low-income consumers being subjected to abusive debt collection practices. Then came the national consumer tribunal’s ruling on Lewis Stores’ dodgy (turns out illegal) selling of unemployment insurance, which set out clearly the restrictions on the sale of unemployment and disability insurance and found Lewis had contravened the National Credit Act (NCA) on both fronts.
The rulings will change unsecured lending practices, whether in the form of cash or furniture, forever. This is not least because a judge of the high court has ordered government to ensure consumers know their rights.
Inevitably, given human nature and the drive to make profit, it will not wipe out abuse, but it will make things more difficult for abusers. And anyone thinking they might be able to devise new forms of abuse should know they are up against an energetic and newly invigorated team at Summit Financial Partners, which is on a mission to clean up unsecured lending.
Summit was involved in both cases, and CEO Clark Gardner has made no secret of his determination to track down debt 6,600 6,200 5,800 5,400 5,000 4,600 collectors who have issued EAOs illegally and to continue investigating possible contraventions of the NCA at Lewis.
The common theme in both cases is that the regulators are not up to the admittedly tough task of protecting the most vulnerable members of our society from unscrupulous lenders.
Winding through this common theme is the fact that it was down to civil society to demand the protection that is promised by various pieces of legislation, namely the constitution, NCA and Magistrates’ Court Act.
In hindsight, government’s ambitious and commendable intention of promoting financial inclusion while protecting low- income consumers from unscrupulous lenders looks totally unrealistic when stacked against its capacity for organisation.
Those of a charitable disposition say the design of the regulatory system is inappropriate and regulators do not have sufficient resources. The national consumer tribunal, at the apex of the system, is effectively prevented from dealing with major cases because it is overwhelmed with more than 1,000 applications for debt rearrangements that have to be considered each week. The National Credit Regulator (NCR) is also obliged to devote itself to copious amounts of minutiae.
Those of a less charitable dis-