Hon Chairperson, hon Minister, hon Chief Whip, hon members of this House, comrades and friends, credit is one of the cornerstones of the modern financial system. It lubricates the economy and promotes commercial activity. However, credit enables people to spend money they don't have and more money than they earn. They use credit for ordinary purchases, even when they have cash. They use debt to pay off debt.
Credit is often used by poor people who don't have financial management skills. This leads them into a situation of overindebtedness, where they are unable to service credit agreements.
The complex nature of credit agreements renders many consumers vulnerable and often exploited by credit providers. This led to the establishment of the National Credit Act. The Act, like other pieces of legislation such as the Financial Advisory and Intermediary Service Act of 2002, and the Financial Intelligence Centre Act of 2001, which affect the financial services industry, helps to enhance control for better or more responsible credit practices in the credit industry.
The National Credit Act was the subject of intensive consultation and is arguably one of the best-researched pieces of legislation to be introduced into our law. The Act comprehensively regulates the credit industry and profoundly changes and codifies much, if not all, consumer credit law. The Act also introduced new concepts to our law, such as affordability, reckless lending and debt counselling.
Among a long list of abuses, the Act targets incorrect credit information; exploitative interest rates, fees and charges; abusive collection charges; discriminatory credit granting and lending without regard for a borrower's ability to repay.
The NCA has updated areas of the law that were contained in the Credit Agreements Act, the Usury Act and elsewhere and that were cumbersome, unintelligible, ineffective, subject to abuse or just obsolete.
The specific objectives of the Act are inter alia:
to promote and advance the social and economic welfare of South Africans; promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and to protect consumers by
a) promoting the development of a credit market that is accessible to all South Africans and in particular to those who have historically been unable to access credit under sustainable market conditions.
Terms such as "overindebtedness" and "reckless lending" are key concepts, which have changed the basis on which credit is granted and go far beyond simply checking the credit records.
The National Credit Act of 2005 was part of a comprehensive legislation overhauling by the ANC government, designed to protect the consumer in the credit market and make credit and banking services more accessible. The Act was introduced, and I quote:
To promote and advance the social and economic welfare of South Africans; to promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry; and to protect consumers ...
The purpose of the National Credit Act is therefore to promote a fair and nondiscriminatory marketplace for access to consumer credit, to regulate consumer credit, to improve standards of consumer information and to prohibit certain unfair credit and credit marketing practices.
Regulation of the consumer credit market is one of the constitutional imperatives advocated by the Constitution of the Republic of South Africa. The ANC believes that at the heart of the prohibition of unfair discrimination lies the recognition that the purpose of our new constitutional and democratic order is the establishment of a society in which all human beings are accorded equal dignity and respect, regardless of their membership of particular groups.
The ANC also believes that all citizens of South Africa, at present and in future, have the right to a life of wellbeing. On the 20th anniversary of our freedom, there can be little argument that the human-rights values underpinning our democratic dispensation have become increasingly entrenched with the passage of time.
More and more of our people have come to rely on and assert their rights, which have been placed within their grasp by the ANC government, through the broad objectives of the ANC's financial and economic policies, aimed at fulfilling these rights in accordance with constitutional imperatives.
Since the coming into operation of the National Credit Act of 2005, there have from time to time been implementation and interpretation challenges in respect of credit regulation. These challenges necessitate amendments to the Act in order to ensure proper and better implementation of the Act and to ensure certainty and clarity where the Act seems to create uncertainty. The main objective of the National Credit Amendment Bill is to address the implementation challenges that have materialised.
It is acknowledged that one of the key areas requiring attention is reckless lending. The Bill seeks to develop and nurture an environment that balances responsible lending and borrowing with access to affordable credit.
The key amendments that would change the lives of our people, who are dependent on credit for their sustainable livelihoods, are to be found in clauses of the Amendment Bill. It would allow the Minister to require all credit providers to register and empower him to issue affordability assessment regulations that provide for a debt counsellor to issue a clearance certificate if the consumer has satisfied all the debt obligations as prescribed.
It would provide for the automatic removal of consumer credit information and for a registered auditor to confirm that consumer credit information has actually been reviewed, verified, corrected or removed. It would also empower a person to submit a complaint concerning allegations of a reckless credit agreement to the National Credit Regulator.
It has been far too easy for credit providers to simply provide credit and easy loans without considering the effect of their actions on overindebted communities. The National Credit Amendment Bill will certainly go a long way in restoring economic freedom and economic independence to an important part of our population.
In conclusion, it is not child's play to be a member of the NCOP. As you can see, members of the NCOP are committed to taking South Africa forwards. They are under pressure with regard to Bills and don't resist. Because of your leadership, they work day and night.
In South Africa, people are waiting for 7 May 2014 to cast their votes for the ANC so that the ANC can govern forever ...
... tot Piet kom. [... until Peter comes.]
Let us join hands together with the other political parties ...