Beware of bad loans

CREDIT providers, including everybody from micro lenders, retailers and the banks, have been served notice that if they lend money to over-indebted consumers these loans may be written off and criminal steps taken against the directors of these companies.

Part of the National Credit Amendment Bill which is now being debated in parliament, the new measures will give the National Credit Regulator (NCR) the power to not only investigate cases of reckless lending but to also act against these entities and declare agreements entered into with over-indebted individuals null and void.

Neil Roets, CEO of one of the largest debt management companies in South Africa, welcomed the move. He said it was long overdue because many retailers and other suppliers of unsecured credit were still breaking the law on a massive scale by lending money to over-indebted consumers thereby plunging them ever deeper into a debt hole. 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, Roets said.

” Department of Trade and Industry officials said in parliament last week that they intended extending the powers of the National Credit Regulator to conduct proactive investigations and impose administrative fines on perpetrators as well as empowering the minister to provide debt relief mechanisms through regulations. It is believed that this will include measures to forgive debt in certain circumstances.

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

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