1. The Sixth Annual African Consumer Protection Dialogue Conference “Misleading advertisement and reckless lending” September 2014, Lilongwe, Malawi

2. 2 Credit Providers Credit Providers = +5,000 Credit Bureaus 21.71 million Credit Active Consumers Debt Counsellors Credit Bureaus = 14 Debt Counsellors = +2,000 The current credit landscape

3. The current credit landscape…performance of consumers 3 -The removal of adverse project was completed at the end of May 2014 -An improvement the profile of consumers in the March 2014 quarter…but many still have impaired records

4. The current credit landscape…the performance of accounts 4 -Accounts also showed an improvement post the removal process

5. Some current challenges in the market  Inadequate affordability assessment  Growing number of consumers with impaired credit records  Excessive pricing of credit life insurance  Unprecedented growth in unsecured credit and slowdown in mortgage lending (effects of growth in unsecured credit still being felt now)  Emoluments attachment orders easily obtainable even on reckless credit 5

6. Specific implementation problems  Generic requirement for affordability assessment not adequate (assessing financial means & debt repayment history) -under-disclosure of consumers’ living expenses -lack of verification of income disclosed -credit bureau reports not obtained -delay in approving & granting credit after obtaining credit reports -lending to the maximum of the consumers’ available disposable income 6

7. Cross-border issues  Many companies operating in other countries such as the US, UK, Australia, Mauratius opened offices in South Africa  Their business models not in line with the National Credit Act and have caused problems in the South African credit market  There is a need for a co-ordinated approach to cross-border regulation and enforcement  NCR is proposing a formal international forum to discuss and formalises processes for cross border co-operation  Meetings will be scheduled with regulators 7

8. Specific cases on overseas companies operating in South Africa Wonga and Capfin  Lack of income & living expense verification  Inappropriate advertisements for credit (fast & easy loans, no payslip, only bring identity document)  Short term credit (up to 6 months & R8000) Satinsky Group  Consumers enticed to participate in scheme for vehicle finance  Adverts for vehicle finance displayed on vehicles purchased through the scheme  Consumers paid commissions for the adverts  Scheme collapsed 8

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10. 10 Thank You! www.ncr.org.za