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NATIONAL CREDIT AMNESTY APPROVED

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NATIONAL CREDIT AMNESTY APPROVED

The proposed credit amnesty, which aims to eliminate the black listing of approximately 1.6 million consumers who have paid their debts but are still prevented from gaining access to credit by negative listings on credit bureaux, has been approved by Cabinet. It is expected that Cabinet's decision will be published shortly in the Government Gazette, following which the public will have an opportunity to comment on the proposed amnesty for a period of 30 days thereafter.

It has been reported that the Department of Trade and Industry (DTI) is setting new rules in terms of which lenders must list consumers with credit bureaux. According to representatives of the National Credit Regulator (NCR) these rules include prohibitions against:

* Listing a consumer at credit bureaux until that consumer is at least three months in arrears.

* Recruitment agencies using credit information when someone is applying for a position (with the exception of people who work in positions of trust, with money or who are appointed in a financial position).

* Lenders utilising forfeited debt as a risk factor. While this step is already prohibited by other legislation it is common practice for lenders and debt collectors to strike on old debts.

Credit Amnesty

The DTI has stated that it aims to implement the credit amnesty in November 2013, despite fierce opposition to the proposed amnesty by the Banking Association of South Africa, which believes it will send an incorrect message to consumers. The latest amnesty proposal is thought to benefit 1.6 million people who are presently blacklisted by credit bureaux. Many believe the haste with which the amnesty proposal is being pushed is politically motivated in light of next year's elections. NCR has stated that if Cabinet approves the scheme, the DTI will issue a notice giving the public 30 days in which to comment.

While the DTI's original proposal allowed for a once-off removal of all adverse credit listings with a value equal to or less than R10 000, there is no value tied to the latest proposal, which calls for removal of negative information regardless of the value of the debt. In addition, the proposal includes the suggestion that after the credit amnesty, credit bureaux will have to constantly remove negative information (including information in respect of court orders) once a debt is paid. Currently there is a prescribed period before negative information can be removed.

If you have any questions and/or queries, please don't hesitate to contact Simone Monty at simonem@rmlaw.co.za or Tarryn Poppesqou at 011 523 6126 or tarrynpo@rmlaw.co.za