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

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

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

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

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

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

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

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 Thank You!