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Cape Town – It is not all about greed among financial institutions and it does not mean all financial institutions are to blame for reckless lending.
This was one of the conclusions by ANC MP Joanmariae Fubbs, chair of Parliament's committee on trade and industry, at a session on the National Credit Amendment Bill on Wednesday. Various stakeholders raised their issues of concern about the bill with the committee.
Another issue that came through repeatedly, according to Fubbs, is the need for a well-funded National Credit Regulator.
"We are relying on stakeholders to enable us to craft more robust legislation and fill any gaps," she said.
Rudolph Willemse, chair of the Large Non-Bank Lender Association (LNBLA), told the committee that its members have a combined (loan) book of R32bn.
He emphasised that the organisation does not believe in criminal sanctions in the credit law, but rather that, if a member has been sanctioned, he should be able to come back to the industry.
The LNBLA also feels that the criteria for debt intervention as proposed in the bill is not clear.
"We would like to see the circumstances under which such [debt intervention] orders can be given," said Willemse.
He cautioned that lenders will tend to avoid risk and the bill could lead to more people being excluded from obtaining credit.
"It is a complex process to try and determine reckless lending," he added.
He is also concerned about credit information being circulated by email.
Another trend he pointed out to the committee is that it is becoming more and more difficult for lenders to enforce the payment of debt.
"I don't want Parliament to make a law which actually makes people feel they need not pay back loans, because government will interfere and come to their rescue. At the same time there also should not be reckless lending," said Willemse.
In a presentation by the National Debt Counselling Association (NDCA), Benay Sager of Intelligent Debt Management (IDM) told the committee that some consumers end up with as little as R150 per month once all their debt payments have been made.
"It is a perfect storm created by the bad economy and inflation," said Sager.
He agreed with Willemse that it is, however, difficult to establish when reckless lending took place.
In his view, it would be a good idea for government to provide a subsidy for low-income earners who want to obtain debt counselling.
Yvonne Oberholtster addressed the committee in her personal capacity. She said the NCR is over-stretched and will be even more burdened if the current proposed credit bill is turned into law.
Her husband, Deon, told the committee that he wants to caution against accepting a bill that does not fill existing loopholes.
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