Publications
Partners
Cape Town - Credit lenders should not moan about the new credit amnesty, which forms part of the amendments to the National Credit Act, but should rather look for new ways of deriving consumer information on which to base their lending decisions.
Nathan January, CEO of online credit lender wanna loan?, said the regulation may prove to be an opportunity for the industry in the long run.
“Lending decisions are too reliant on consumers’ credit history. This regulation and future regulations will force credit providers to be more innovative about data and data sources that inform their decisions,” explained January.
The credit amnesty, which was implemented as of April 1 2014, is an intervention by the government to open up opportunities for consumers whose credit record unfairly discriminates them from accessing credit and from securing work opportunities.
“It is however important to note that this regulation does not “wipe” the slate clean for consumers,” said January.
As part of its roll-out, credit bureaus are legislated to, within the next two months, remove from their registers all adverse credit information about consumers who have settled their debt.
They are also prohibited from displaying or providing information that ought to be removed to anyone.
According to January, credit history and credit judgements are in any case not necessarily an accurate reflection of consumer behaviour.
“There are other variables at play. Lending decisions that are based primarily on traditional methods, such as credit history, are short-sighted and outdated,” he said.
“We are in support of this regulation and what it seeks to achieve.”
However, its success will be dependent upon other factors, including consumer education.
“There isn’t enough information about this regulation. Without adequate consumer awareness, this credit amnesty could become a flop,” he said.
“The credit industry must also engage in consumer education – and banks, particularly, have a bigger role to play compared to micro and online lenders.”
Nathan January, CEO of online credit lender wanna loan?, said the regulation may prove to be an opportunity for the industry in the long run.
“Lending decisions are too reliant on consumers’ credit history. This regulation and future regulations will force credit providers to be more innovative about data and data sources that inform their decisions,” explained January.
The credit amnesty, which was implemented as of April 1 2014, is an intervention by the government to open up opportunities for consumers whose credit record unfairly discriminates them from accessing credit and from securing work opportunities.
“It is however important to note that this regulation does not “wipe” the slate clean for consumers,” said January.
As part of its roll-out, credit bureaus are legislated to, within the next two months, remove from their registers all adverse credit information about consumers who have settled their debt.
They are also prohibited from displaying or providing information that ought to be removed to anyone.
According to January, credit history and credit judgements are in any case not necessarily an accurate reflection of consumer behaviour.
“There are other variables at play. Lending decisions that are based primarily on traditional methods, such as credit history, are short-sighted and outdated,” he said.
“We are in support of this regulation and what it seeks to achieve.”
However, its success will be dependent upon other factors, including consumer education.
“There isn’t enough information about this regulation. Without adequate consumer awareness, this credit amnesty could become a flop,” he said.
“The credit industry must also engage in consumer education – and banks, particularly, have a bigger role to play compared to micro and online lenders.”
