The National Credit Amendment Act 19 of 2014 has been published in Government Notice 389 in Government Gazette 37665 of 19-5-2014 and came into force on 13-03-2015.
What are the purposes of the amendment Act?
The purposes of the amendment Act are –
- to amend the National Credit Act 34 of 2005,
- to amend certain definitions in the National Credit Act 34 of 2005;
- to provide for the alteration of the governance structure of the National Credit Regulator;
- to empower the Chief Executive Officer to delegate certain functions to other officials of the National Credit Regulator;
- to provide for the registration of payment distribution agents;
- to tighten measures relating to debt counsellors and the conduct of their practices as debt counsellors;
- to allow registrants to voluntarily cancel their registration;
- to empower the Minister to issue a notice for the removal of adverse consumer credit information; to provide for automatic removal of adverse consumer credit information;
- to empower the National Consumer Tribunal to declare a credit agreement reckless;
- to provide for the registration and accreditation of alternative dispute resolution agents; and to provide for matters connected therewith.
Changes to definitions (a selection)
The definition of 'mortgage' has been replaced. The new definition provides that a mortgage is a mortgage bond registered by the registrar of deeds over immovable property that serves as continuing covering security for a mortgage agreement.
A 'mortgage agreement' is defined as a credit agreement that is secured by the registration of a mortgage by the registrar of deeds over immovable property.
The National Credit Amendment Act has introduced 'payment distribution agents'. A 'payment distribution agent' is a person who on behalf of a consumer that has applied for debt review, distributes payments to credit providers in terms of a debt re-arrangement, court order, order of the Consumer Tribunal or an agreement.
The definition of 'prohibited conduct' has been amended. 'Prohibited conduct' is defined as an act or omission in contravention of the Act.
The second part of the definition of 'secured loan' has been amended. A secured loan is defined as an agreement, irrespective of its form but not including an instalment agreement, in terms of which a person (a) advances money or grants credit to another, and (b) retains, or receives a pledge to any movable property or other thing of value as security for all amounts due under that agreement.
Registration of credit providers: threshold requirements
In terms of the amended section 42 the Minister, by notice in the Gazette, must determine a threshold for the purposes of determining whether a credit provider is required to be registered as a credit provider in terms of section 40.
Payment distribution agents
Section 44A has been inserted in the Act. It provides for the registration of payment distribution agents. Section 44A provides that a person may apply with the National Credit Regulator to be registered as a payment distribution agent and that a person must not offer or engage in the services of a payment distribution agent, or hold themselves out as being authorised to offer such services, unless the person is registered as payment distribution agent. A consumer is not obliged to use the services of payment distribution agent.
These agents must comply with education, experience or competency requirements (and the requirements of section 46). They must also maintain fidelity insurance and trust accounts and submit financial accounts as may be required by the National Credit Regulator for purposes of a financial audit.
Credit providers are not permitted to have any direct or indirect interests in the management or control or the business operations of a payment distribution agent (or debt counselling business).
Disqualification of natural persons (section 46)
The disqualification of certain natural persons applies to credit providers, debt counsellors and payment distributions agents. If a natural person is, for example, an unrehabilitated insolvent, her or she may not register as credit provider, debt counsellor or payment distribution agent.
Application for registration as credit provider (section 48)
The amended section 48, among others, provides that if a person qualifies to be registered as a credit provider, the National Credit Regulator must further apply the criteria prescribed in section 48, which include the commitments, if any, made by the applicant in connection with combating over-indebtedness and compliance with a prescribed code of conduct as well as affordability assessment regulations made by the Minister on the recommendation of the National Credit Regulator. Section 48 empowers the Minister to prescribe criteria and measures to determine the outcome of affordability assessments provided for in section 48.
Automatic removal of adverse credit information (section 71A)
Section 71A was inserted into the Act. It makes provision for the automatic removal of adverse credit information. It, amongs others, provides that the credit provider must submit to all registered credit bureaux, within seven days after settlement by a consumer of any obligations under any credit agreement, information regarding the settlement where an obligations under such credit agreement was the subject of an adverse classifications, an adverse listing or a judgment debt. The credit bureaux must then remove any adverse listing within seven days after receipt of information regarding the listing from the credit provider.
Suspension of reckless credit (section 83)
The heading of section 83 ("Court may suspend reckless credit") has been substituted by the heading, "Declaration of reckless credit". In terms of the amended section 83 any court or Tribunal may in proceedings in which a credit agreement is being considered, declare that a credit agreement is reckless. In terms of the amended section 136 a complaint concerning an allegation of reckless credit may be submitted to the National Credit Regulator.
Termination of an application for debt review (section 86)
Section 86(10) and (11) of the Act have been substituted. The amended section 86(10)(b) provides that no credit provider may terminate an application for debt review lodged in terms of the Act, if such application for review has already been filed in a court or in the Tribunal.
Prohibited charges (section 100)
Section 100 has been amended by the addition of subsection 3 that provides that a person who contravenes section 100 by charging prohibited charges is guilty of an offence.
Sale of prescribed debt (section 126B)
Section 126B has been inserted in the Act. It provides that no person may sell a debt under a credit agreement to which the Act applies and that has been extinguished by prescription under the Prescription Act 68 of 1969. No person may continue the collection of, or re-activation of debt which has been extinguished by prescription and where the consumer raises the defence of prescription, or would reasonably have raised the defence of prescription had the consumer been aware of such a defence, in response to a demand, whether as part of legal proceedings or otherwise.
Required procedures before debt enforcement (section 129)
Section 129 has been amended. The substituted subsection 3 provides that subject to subsection (4), a consumer may at any time before the credit provider has cancelled the agreement, remedy a default in such credit agreement by paying to the credit provider all amounts that are overdue, together with the credit provider's prescribed default administration charges and reasonable costs of enforcing the agreement up to the time the default was remedied.
Subsection 5 has been inserted in the Act. It provides that the notice contemplated in subsection (1)(a) of the Act must be delivered to the consumer by registered mail or to an adult person at the location designated by the consumer.
The consumer must in writing indicate the preferred manner of delivery contemplated in subsection 5. Proof of delivery contemplated in subsection 5 is satisfied by—
- written confirmation by the postal service or its authorised agent, of delivery to the relevant post office or postal agency; or
- the signature or identifying mark of the adult person at the location designated by the consumer.
Registration and accreditation of alternative dispute resolution agents (section 134A)
Section 134A was inserted in the Act. It provides that the National Credit Regulator must register and accredit alternative dispute resolution agents.
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