I have had a chance to have a look at some aspects of the latest version of the National Credit Bill (to which the increasingly meaningless title “final” has also been attached).

There are two aspects that I would like to discuss:

1. The deletion of the repossession provisions of the bill; and
2. The debt counselling provisions.

The previous versions of the Bill had a Section 131 which made provision for the compulsory repossession and sale of goods sold in terms of a credit agreement in a similar manner to the present Credit Agreements Act. The latest version of the Bill, however, appears to do away with the compulsory repossession of goods sold in terms of a credit agreement. If this compulsory repossession provision is included in the Act, it is to be welcomed by Creditors, as it will do away with the sometimes timely delays in the repossession process before a creditor can proceed against a debtor for the outstanding balance, while at the same time still allowing creditors who sell “big ticket” items, such as motor vehicles, the option to proceed with the repossession of the valuable goods.

The problem for creditors comes with the provisions of Section 129 which, although well-intentioned, are ill defined and have the potential to unduly delay the creditor in proceeding in the collection of outstanding debts. Section 129 makes provision for giving the debtor the option to have the matter referred to a debt counsellor, alternative dispute resolution, a consumer court or the ombudsman before legal action can be instituted against a debtor in terms of a credit agreement.

The theory of providing the debtor the option of referral to these options (although I believe the choice should not include alternative dispute resolution) is sound. The lack of financial literacy amongst South Africans is an issue that needs to be addressed, and offering those getting themselves into financial difficulties the option to rehabilitate would be a step in the right direction.

As an aside, what is particularly alarming to me as an attorney acting in a number of consumer collection matters, is the disproportionately large number of teachers, mostly from previously disadvantaged communities, in financial difficulties, and who are showing very poor financial literacy. These are the people who are educating our future consumers, and if they have no idea how to handle their own personal finances then the chances are that, as teachers and role models to their pupils, they are instilling these bad financial patterns on our future generations.

But I digress: the practical problem with the current form of the Bill is that the referral to debt counselling and the other alternatives is grey in its procedural time frame. While if the debtor does not elect to use these options within a prescribed period the creditor can institute legal action, once the debtor has elected to use these options there is no time frame for these external bodies to deal with the matters. Exactly who and how a number of these bodies are selected/constituted is also not clearly defined. But if any of our experiences with state and parastatal organisations is anything to go by, then speed of delivery of service will not be one of their strong points.

The Bill needs to provide for time frames for these organisations to deal with these matters, or the successful commercial operation of South African creditors could greatly be compromised.

I trust that those representing the credit community and making the final representations to the Parliamentary Portfolio Committee on Trade and Industry will address this issue, and that changes will be made before the Bill is enacted.