Chairperson, hon Minister and hon members, the financial industry in South Africa, led by the Reserve Bank and commercial banks, has a credible reputation. In fact, the banking system in South Africa is recognised as one of the best.
However, the situation in terms of the needs on the ground differ very much from this reputable and technologically advanced system. According to the National Credit Regulator, NCR, over 9 million people have more debt than they can afford. More than 16 million people have impaired credit records, which means they have fallen behind with payments, they have stopped paying or they might even be blacklisted.
Poor South Africans are exploited by credit providers and too many are bullied by reckless lenders and loan sharks. Consumers are charged very high interest rates, handling fees and additional premiums for credit insurance. Unfortunately, the risk profiles of consumers are not considered. Therefore, the cost of credit leaves many poor people with having their property confiscated. They lose control of their personal finances by handing over their bank or social grant cards to loan sharks although this is illegal. They are often bullied into signing voluntary garnishee orders.
It became necessary to protect vulnerable communities by placing obligations on the industry rather than to prescribe to consumers when credit transactions may be entered into. It became necessary to plug the loopholes in legislation, especially in the micro-lender and credit- provider sector, to stop unfair, discriminatory and unreasonable credit- providing practices. It became necessary to apply the same responsibilities of the top end of the credit market to the bottom end too.
In the proposed amendments, the NCR is empowered to ensure that the whole industry complies with the same principles and requirements in law when dealing with consumers and their right to protection. The amendments also provide for the structuring, organisation and operation of the National Consumer Tribunal.
The Minister ran through many of the amendments in the Act and I would like to add to and discuss the impact of these amendments as follows. The provision for registration and voluntary cancellation of all payment distribution agents should stop informal, unprincipled and illegal operations. Measures relating to debt councillors and the conduct of their practices will be tightened.
The removal of adverse credit records of a consumer under debt review or debt-rearrangement agreement will be removed once the debtor has met all payment obligations or has been rehabilitated. The primary home of a consumer is protected when distress debt must be evaluated and rearranged under the debt review process.
To address irresponsible granting of credit, lenders and credit providers will have to consider the affordability of credit to consumers through affordability assessment regulations. All credit providers, even micro- lenders and loan sharks, must register to comply with the relevant requirements. The process for proper consideration for restructuring of distress debt is required to assist consumers to be able to meet their obligations.
Debt councillors will be obliged to issue rehabilitation certificates once a consumer has complied with the requirements of the rearranged debt agreement. The amendments also provide for the capping of costs, interests, levies and credit insurance via regulations by the Minister of Trade and Industry in consultation with the Minister of Finance. We request the Minister to be sensitive when issuing regulations to protect the industry from consequential damage. It was agreed that such regulations will be submitted to Parliament for oversight prior to publication.
The proposed amendments to the National Credit Act are in support of a reliable and credible industry in order to optimally support and protect consumers. Ultimately, responsible consumer spending through credit agreements can contribute to economic growth and job creation.
In closing, I would like to thank Minister Davies; Director-General Lionel October; Deputy Director-General Ntuli, who is also present today; the Department of Trade and Industry's parliamentary liaison officer, Saroj Naidoo; and, in particular, Justice Mokoena. Thank you to the other DDGs and Department of Trade and Industry staff. It has been an amazing five years and we wish to congratulate the department on its performance.
We also wish to thank the select committee chairperson, hon Dumisani Gamede, for the role he has played, not only with this legislation but over the five years. Thank you. [Applause.]