National Credit Bill and Draft National Credit Regulations Overview of likely impact on ABIL business March 2006 Johan de Ridder

The Bill has five core elements 1. Consumer credit policy Non-discrimination Market conduct Privacy and credit data utilisation/ access Reckless lending 2. Credit agreements Prohibited & prescribed provisions Pricing limitations Disclosure standards/ requirements

The Bill has five core elements 3. Debt enforcement regulation Permissable charges, cost recovery and penalties Due process Prohibited conduct 4. Statutory debt mediation Debt counselling Consent orders 5. Levelling of payments playing field Consequential change to NPS Act on preferential payments processing by banks Prohibition on preferential contracts with consumers

1. Consumer credit policy impact Non-discrimination: Adjustments to credit rules/ reduced front-end discretion Formal assessment of all applications (no informal pre-screening); and Increased data retention on applications i.r.o non-discrimination provisions Impact manageable Market conduct: Tightened controls in mobile environment Renegotiation of employer agreements (minor impact) Adjustments to sales and marketing materials/ processes & tightened controls No material sales impact expected

Consumer credit policy impact (cont.) Data privacy and access: Credit bureau regulations still awaited No material changes/ impact foreseen Reckless lending: Detailed discussion on changes and impact to follow Required adjustments mostly implemented. Smaller adjustments to follow over time

2. Impact of credit agreement provisions Prohibited/ prescribed provisions: Minor adjustments to credit agreements required No material compliance impact foreseen Limitations on fees and interest: Detailed discussion to follow Disclosure standards and requirements: Present business conduct largely compliant Manageable cost impact of increased compliance burden Impact on business not expected to be material

3. Impact of debt enforcement provisions Permissable charges and cost recovery: No material impact on Group Due process: Slight procedural adjustments Non-material increase in compliance costs No material impact on debtor behaviour/ bad debt recoveries Prohibited conduct: Group presently operates within defined parameters No impact anticipated

4. Impact of statutory debt mediation process Debt counselling/ re-arrangement: Implications of process serious for debtor/ disincentive Emphasis expected to remain on administration orders (economic market forces) – already imbedded in business Process/ timelines within acceptable parameters of present business practice Impact for ABIL expected to be manageable Consent orders: Likely to be hard to achieve – re-inforces view on administration orders as logical default Impact not expected to be material for group

5. Impact of levelling of payments playing field NPS Act amendment: Issuing banks are eliminating preference in payments processing ABIL has option to stay on sort at source arrangements or migrate to central (Bankserv) EDO solution on 1 July 2006 Modelling of new order presently underway Existing books will run off on present arrangements until December 2007 Indications are that transition will be manageable but that adjustments to lending policy will be required as discussed elsewhere Unlawful contract provisions: Credit agreements do not contain preferential arrangements

Conclusion The Bill as enacted conforms to expectations Draft regulations are likewise in line with expectations New dispensation to large extent in line with MFRC/Exemption Notice dispensation under which ABIL presently operates Cost of compliance largely imbedded in present business Payments system changes the key focus over the next 12 to 18 months ABIL able to comply by 30 September 2006 Overall impact manageable, no new surprises 2 areas of careful migration: Moving high-risk clients to smaller loan sizes and shorter terms to adapt to price ceilings Changing the underwriting rules, especially for high-risk clients, to position for changes to NPS Act.