The National Credit Act (“NCA”) while well intentioned, is proving to be one of the most poorly thought out and drafted pieces of legislation in this country.

However the government seems to be back tracking on one of the more controversial aspects of the legislation, namely the fact that it is drafted to be effective retrospectively. The effects of this would have been mind boggling and unjust with the possibility that agreements that we entered to a number of years back with no knowledge or foresight of the NCA being held to void and in contravention of the Act.

Therefore it is with a degree of relief that creditors can read the following extract taken from the government’s news website:

“The NRC’s Senior Manager on Education and Strategy Peter Setou said transactions entered into before the implementation of the Act (June 2007) would remain valid and enforceable.

Mr Setou further clarified that agreements between the banks, micro-lending institutions and retailers were subjected to debt restructuring.

It was important, he said, to note that provisions such as reckless lending would not apply to these transactions but would apply to transactions granted after June 2007.

“We should also note that debt counselling is aimed at assisting consumers who are over-indebted and to reschedule or restructure the debt to manageable levels and is not about debt pardoning,” said Mr Setou.

He said from 1 June 2007, debt counselling services would be available to consumers who are unable to honour in a timely manner, all credit agreements to which they were party, as indicated by their history of debt repayment.

He also pointed out that the National Credit Act was preceded by extensive research and rigorous consultations with various stakeholders and role-players, including benchmarking with international best practices.

The National Credit Act was signed into law by President Thabo Mbeki in March last year.

It was aimed at regulating the credit granting industry and credit bureaux, curbing reckless lending and ensuring that consumers are protected from unfair business practices.

“This is a comprehensive piece of legislation which will promote responsible lending and prohibit reckless credit granting.

“It further provides for a consistent enforcement framework on consumer credit,” he said.

Other key features of the Act are to ensure that interest and fees are regulated and the advertising and marketing for credit must contain prescribed information on the cost of credit.

In addition the Act seeks:

* To make the credit market function more cost effectively and competitively by promoting a fair, competitive and sustainable credit market;
* To ensure that increased access to credit will not lead to over indebtedness;
* To ensure protection for consumers and secure redress for unacceptable practices
* To ensure compliance with regulatory requirements; and
* To provide for necessary cooperation between national and provincial government as well as industry, consumers and protection agencies to ensure a coherent and integrated regulatory framework.

According to Mr Setou, as per the Act, Credit Bureaux cannot register as debt counsellors.

“The logic is very clear here since there is potential for a conflict of interest,” he emphasised.

In this regard, the NCR has processed the training material and accredited eight training service providers and training for debt counsellors has already commenced.

“The credit regulator has constructive engagement with banks, retailers and other credit providers on an ongoing basis to ensure that clarity is provided where there are issues of interpretation,” he said.” “ BuaNews”