Weekend Argus (Saturday Edition) - - GOODPOSTER -

“Our point of view is that this needs to be ap­proached with a great deal of cau­tion and the full con­se­quences un­der­stood, be­cause this is dan­ger­ous ground,” Lees says.

Dur­ing a meet­ing in Par­lia­ment last month, hosted by the port­fo­lio com­mit­tee on trade and in­dus­try and at­tended by the Na­tional Credit Reg­u­la­tor and the Bank­ing As­so­ci­a­tion of South Africa (Basa), Cas Coova­dia, the man­ag­ing di­rec­tor of Basa, said an amnesty was in­cor­rect in prin­ci­ple and “en­cour­ages an in­ap­pro­pri­ate cul­ture”.

The pre­vi­ous amnesty was not a success, Coova­dia said. “We can’t give out the mes­sage that says, ‘Peo­ple, get into trou­ble and ev­ery five years we’ll call an amnesty’.”

Coova­dia said Basa dis­agrees with the call for a credit in­for­ma­tion amnesty be­cause:

Ex­pung­ing neg­a­tive credit in­for­ma­tion from the records of con­sumers will only en­able them to get more credit, which is counter-in­tu­itive; and

It will make lend­ing more risky, and the banks will have to price for that risk or pull back on lend­ing.

“We be­lieve the im­pact will be fewer loans or more ex­pen­sive loans,” Coova­dia said.

More in­ter­ac­tion and en­gage­ment be­tween the reg­u­la­tor and credit providers would be more pro­duc­tive than an amnesty, he said.

Manie van Schalk­wyk, the Credit Om­bud (who is not a statu­tory om­bud), says the pre­vi­ous amnesty had a clean-up ef­fect and was called for, but an­other amnesty five years later is “dan­ger­ous”. He says: “Most of those who ben­e­fited from the pre­vi­ous amnesty were in de­fault within two years.”

The call for an­other amnesty “doesn’t make sense. It sounds great – like the government is giv­ing con­sumers an­other chance – but it will pro­vide ar­ti­fi­cial re­lief. You may take the neg­a­tive in­for­ma­tion away, but the debt re­mains. And with­out the neg­a­tive in­for­ma­tion, the con­sumer is able to qual­ify for more debt,” Van Schalk­wyk says.

He says the global eco­nomic melt­down was a re­sult of credit be­ing ex­tended to peo­ple who couldn’t af­ford it. “We’re cre­at­ing an en­vi­ron­ment where this could hap­pen again.”

Paul Slot, pres­i­dent of the Debt Coun­sel­lors As­so­ci­a­tion of South Africa, says wip­ing con­sumers’ records clean doesn’t re­solve the prob­lem of over-in­debt­ed­ness. “It will just make the prob­lem worse for those con­sumers who qual­ify for the amnesty. Peo­ple have the

im­pres­sion that their debts get ex­punged, but it’s only the neg­a­tive in­for­ma­tion that gets ex­punged,” Slot says.

Michael Lawrence, the ex­ec­u­tive di­rec­tor of the Na­tional Cloth­ing Re­tail Fed­er­a­tion (NCRF), says the only peo­ple who will score from a credit in­for­ma­tion amnesty are ir­re­spon­si­ble bor­row­ers and ir­re­spon­si­ble lenders, “be­cause in the ab­sence of good in­for­ma­tion they can jus­tify ir­re­spon­si­ble lend­ing”.

Lawrence says the NCRF sup­ports the com­ments made by Basa, “and if there are prob­lems with the record­ing of the data, then they should be ironed out, which is why the NCRF has com­mit­ted to par­tic­i­pat­ing in work groups [to re­solve this is­sue]”.

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