NATIONAL CREDIT REGULATOR Third Quarter Performance Report 2014/2015   Presentation to the Portfolio Committee on Trade & Industry By Ms Nomsa Motshegare, NCR CEO Date: 24.03.2015

OVERVIEW Mandate of the National Credit Regulator Third Quarterly Performance Report 2014/15 Financial Information Key Successes & Challenges 2014/15

MANDATE OF THE NATIONAL CREDIT REGULATOR It is established in terms of the section 12 of the National Credit Act (NCA). Its main purpose is to regulate consumer credit, monitor compliance and enforce the NCA. The National Credit Amendment Act (NCAA): assented to and signed by the President on 19 May 2014; proclamation signed and regulation published on 13 March 2015.

THIRD QUARTER PERFOMANCE REPORT Performance Measure or Indicator 2014/15 FINANCIAL YEAR Output Performance Measure or Indicator Annual Target 3rd Quarter milestones Actual Achievement SO 1: To promote increased access to credit through responsible credit granting Increase awareness of affordability assessment regulations. Number of workshops conducted on affordability assessment regulations. 3 workshops conducted on affordability assessment regulations. N/A ( Target is for the 4th quarter) Reduce cost of credit for consumers Study conducted on Levels of the cost of credit. Conduct a study to review the current levels of the cost of credit. Continue with the review. Not achieved The study is underway & a report to be submitted with recommendations once completed Scope of work amended based on Competition Commission’s response and lack of funding, hence delay in appointing service provider to commence with review.   Service provider appointed in January 2015 to test different scenarios in respect of prescribed formulas Reason for variance Corrective Action

THIRD QUARTER PERFOMANCE REPORT Performance Measure or Indicator 2014/15 FINANCIAL YEAR SO 2: To protect consumers from abuse and unfair practice in the consumer credit market and address Over-indebtedness Output Performance Measure or Indicator Annual Target 3rd Quarter milestones Actual Achievement Conduct reckless lending investigations and issue compliance notices/compliance certificates where applicable. Number of compliance certificates issued/compliance notices. 15 Compliance notices. 4 Compliance notices Achieved   4 compliance notices were issued ( 32 Compliance notices issued to date) Conduct special investigations and enforcement action taken where necessary Number of raids conducted on credit providers and enforcement action taken where necessary Conduct 2 raids in one province and take enforcement action where necessary Take enforcement action and plan for the second raid Exceeded Enforcement action taken , planned and conducted 2nd and 3rd Raids in N/West and E/Cape Provinces respectively Received complaints about credit providers retaining bank cards and ID books. Investigations in the form of a raids had to be conducted.   Reason for variance

THIRD QUARTER PERFOMANCE REPORT 2014/2015 FINANCIAL YEAR SO3: To enhance a consumer credit market regulatory framework Output Performance Measure or Indicator Annual Target 3rd Quarter milestones Actual Achievement Conduct investigations and take enforcement action on credit bureaus Number of investigations and enforcement action taken. 2 Credit bureau investigated and enforcement action taken. Continue with investigation and finalise. Partially achieved 1 investigation into credit bureau commenced and is still on going -will be finalised in the 4th quarter. Procurement process took longer than anticipated. The Request for Quotations (RFQs) had to be issued twice.   Second credit bureau investigation to commence and be finalised in the 4th quarter.  Conduct compliance on site visits Number of compliance on-site visits conducted. *18 on site visits to be conducted. 3 on site visits to be conducted Exceeded 6 onsite visits conducted (18 onsite visits to date) All credit providers were able to confirm availability for the visits Reason for variance Corrective Action Reason for variance

THIRD QUARTER PERFOMANCE REPORT 2014/15 FINANCIAL YEAR SO 4: To improve NCR's operational effectiveness Output Performance Measure or Indicator Annual Target 3rd Quarter milestones Actual Achievement Improve operational efficiency through automated processes. ICT recommendations implemented. Report produced on the implementation of recommendations of the ICT assessment Implement recommendations of the assessment Partially achieved The planning session has been conducted with the service provider. The process to appoint a Project Manager is underway, where after the development of the sub systems will commence.  Increase the number of leaners recruited and trained Number of learners recruited and trained. 20 learners On-going training Achieved  On-going training for the learners continues SO 5: To ensure effective implementation of the National Credit Amendment Act (NCAA) Create awareness of the NCAA. Number of workshops conducted with relevant stakeholders 30 workshops with relevant stakeholders and monitor compliance with the NCAA. 6 workshops with relevant stakeholders Exceeded: 12 Workshops As a result of NCR media campaigns, the NCR received a lot of invites to conduct workshops ( to date:75 workshops)   Reason for variance Reason for variance

THIRD QUARTER PERFOMANCE REPORT 2014/15 FINANCIAL YEAR Output   Performance Measure or Indicator Annual Target 3rd Quarter milestones Actual Achievement SO 5: To ensure effective implementation of the National Credit Amendment Act (NCAA) Create awareness of the NCAA. Number of multimedia awareness campaigns (radio/TV/news print) conducted  18 Radio / TV interviews/ News print and monitor compliance with the NCAA.  3 Radio / TV interviews/ News print. ( To date 69 radio/TV interviews) Exceeded: 6 radio interviews As a result of NCR media campaigns, the NCR received a lot of invites to participate in interviews Number of outreach programmes and exhibitions (mall activations/outside broadcast/road shows/Imbizos) conducted. 5 of any of the following activities: -exhibitions -mall activations -Outside Broadcast (OB) -Road shows and monitor compliance with the NCAA. 1 of the following activities: -exhibitions -mall activations -Outside Broadcast (OB) -Road shows. (To date:14 exhibitions, activations, road shows) Exceeded: 2 exhibitions As a result of NCR media campaigns, the NCR received a lot of invites to participate in outreach programmes Reason for variance Reason for variance

THIRD QUARTER PERFOMANCE REPORT Performance Measure or Indicator 2014/2015 FINANCIAL YEAR Output Performance Measure or Indicator Annual Target 3rd Quarter milestones Actual Achievement SO 5: To ensure effective implementation of the National Credit Amendment Act (NCAA) Conduct special investigations and take enforcement action where applicable Number of investigations conducted on removal of adverse consumer credit information regulations 3 investigations on large credit providers NA (Target was achieved in the first quarter)  ( Target was achieved in the first quarter)   Number of investigations conducted on unsolicited credit provision and enforcement action taken. 15 investigations 5 investigations Achieved  5 investigations were conducted ( to date, 36 investigations have been concluded)

FINANCIAL PERFOMANCE BUDGET OVERVIEW 2014/2015 2014/15 Total expenditure budget revised from R129m- R117m Re-prioritization and cost containment measures Additional funding of R5m received in January 2015

FINANCIAL PERFOMANCE OPERATIONAL SPENDING APRIL 2014 – DECEMBER 2014   Actual Budget Variance Remaining Budget Annual Revised Budget ( Apr’14- Dec’14) (Jan'15 -Mar’15) (Apr’14- Mar’15)  Income R  % Fees from registrants 20,456,931 26,220,441 -5,763,510 -22% 23,584,313 44,041,000 DTI Transfers 63,845,000 - 0% 5,000,000 68,845,000 Other Income 2,612,720 2,400,000 212,720 9% 1,800,392 4,146,690 TOTAL INCOME 86,914,651 92,465,551 -5,550,790 -6% 30,784,705 117,632,690 Expenditure Personnel costs 52,784,768 52,513,772 -270,996 -1% 18,825,525 71,610,294 Professional fees 7,264,930 10,810,423 3,545,493 6,538,493 13,803,423 Consumer education 3,241,009 4,538,510 1,297,501 2,391,718 5,632,727 Stakeholder communication 1,044,943 1,145,091 100,148 529,368 1,574,311 Debt relief 1,225,504 1,552,622 327,118 1,893,691 3,119,195 Administrative costs 13,668,231 12,722,926 -945,306 -7% 4,253,245 17,921,476 TOTAL OPERATING EXPENDITURE 79,229,385 83,283,344 4,053,958 5% 34,432,040 113,661,426 Challenges * Income below budget-> implementation of NCAA * Funding->Premises Highlights (cost containment measures) * Surplus for the year to date * Expenditure below budget at 5%

FINANCIAL PERFOMANCE OPERATIONAL SPENDING APRIL 2014 – DECEMBER 2014 Expenditure to date Annual budget Variance Variance (%) Remaining for the year Capital expenditure 4,010,306 3,971,263 -39,043 -1% Notes *ICT system currently on review.

KEY SUCCESSES & CHALLENGES 2014/15 ENFORCEMENT ACTIONS 28 referrals to the National Consumer Tribunal; Raids conducted in 3 provinces 32 compliance Notices issued CONSUMER EDUCATION & STAKEHOLDER ENGAGEMENT Advertising Value Equivalent of > R148m: Across all media channels 14 exhibitions, activations, road shows 75 Education workshops conducted with stakeholders: Provincial Consumer Protection Desk; Trade Unions, Universities, Church Groups, Tribal Authorities Interviews: radio & TV -69 Established Credit Industry Forum CHALLENGES: Funding Office Space

Thank You! www.ncr.org.za