If you’re running a credit loan operation that isn’t registered with the National Credit Regulator (NCR), be warned – you will no longer be able to claim back money you’ve lent to consumers and could very well find yourself losing cash.
In addition, the NCR says unregistered lenders won’t be allowed to extend credit.
The changes form part of Trade and Industry Minister Rob Davies’ determination for a new threshold for credit providers which previously determined that lenders were legally required to register with the NCR only if they had more than 100 debtors on their books.
Now everyone, regardless of the number of people who have been given credit, will be required to register.
“The threshold as determined by Minister Davies means that any and every person or entity that trades as a credit provider, even the smallest, illegal and informal credit providers are encouraged to register with the NCR,” ministerial spokesman Sidwell Medupe said in a statement.
“The desired outcome is to locate, regulate and monitor all credit providers in the republic in order to promote responsible credit lending, to curb reckless credit lending and reduce the over indebtedness of consumers.”
Davies warned that unscrupulous lenders who make use of illegal practices – such as retaining bank cards, SA Social Security Agency (SASSA) cards or ID books as security to force payment from defaulting borrowers – would face the full wrath of the NCR.
“This new threshold is an innovation in the industry that will largely contribute to an equal playing field in the credit market,” Davies said. “The threshold will increase legal and responsible credit lending, which will in turn lead to broader financial inclusion if implemented and sustained effectively with the support of the public and the industry.”
South Africans are currently the most indebted population in the world, with consumers owing debtors about R1,64 trillion and more than 10 million consumers with impaired credit records.
An SA Human Rights Commission report released last year found that over half of the 19 million credit-active South Africans were over-indebted with impaired credit records that are more than three months in arrears, while 15% of the credit-active population are described as debt-stressed, meaning they’re one to two months in arrears.