1. Standard Bank Debt Intervention Proposal
February 2018
Credit Risk Head of Personal and Business Banking South Africa: Thabani Ndwandwe

2. Standard Bank believes that Africa is our home and we drive her growth.
As an organisation, we are committed to the call of “Improving lives and fulfilling aspirations across Africa”.
We also believe that it is our duty to:
We take the issues of consumer over-indebtedness and financial vulnerability seriously. As a bank in, for and across Africa, it is important to us that we contribute to crafting sustainable solutions to address these challenges.
Introduction
Responsibly grant debt that is affordable for the consumer
Promote a culture of consumer financial responsibility
Promote a culture of saving
Responsibly and sustainably assist the consumer in times of need.

3. Overview of the presentation
View on the draft bill
Proposed solutions to curb over-indebtedness
Existing remedies for over-indebtedness
Conclusion

4. View on the Draft Bill

5. Concerns
Standard Bank agrees that there is a great need to solve for over-indebtedness in South Africa. We are however, concerned that the bill, as it stands, may have long-term implications and not sustainably solve over indebtedness, particularly for the most vulnerable. Our concerns include the following:
A deterioration in the culture of loan repayment
Impeded prudential obligations: If banks are not able to ensure repayment on loans, then depositor’s money is at risk
Loans being subject to tighter controls & an increase in the cost of credit
Decrease in financial inclusion

6. Proposed solutions to curb over-indebtedness

7. Reform existing debt intervention mechanisms for a sustainable solution
Effectively address reckless lending
Ensure that the NCA is adequately enforced
Ensure the NCR is granted the necessary powers and resources to ensure that all consumers benefit from the protections already contained in the law
Debt Review
Cover the cost of debt review on behalf of the poor consumer
Debt Counseling Rules System (DCRS)
Adopt DCRS as a compulsory system for all credit providers
Improve some of the inefficiencies in the system
Standardise voluntary debt relief measures across the credit industry
The existing, bespoke mechanisms across the industry should be investigated for consideration of best-practice, with a view of applying them to the broader industry
Ability to identify debts/customers that have received relief to avoid further indebtedness

8. Reform existing debt intervention mechanisms for a sustainable solution
Understanding the behavioural aspect of over-indebtedness and a focus on early identification
Creating efficient ways for monitoring customers to check for the early identification of distress
Insurance claim processes
Improve claim process
Waive technical conditions that lead to lapses for low-income customers where education is weak
Interventions to grow individual income/wealth
Ensuring flexibility of the repayment of student loans
Cultivation of entrepreneurship

9. Existing remedies for over-indebtedness

10. Current legislated remedies and limitations
We do acknowledge that there is a need for a more inclusive process that is cost effective for low income consumers…
INSOLVENCY / SEQUESTRATION
ADMINSTRATION ORDER
DEBT REVIEW

11. Current solutions offered by the Bank
… As a result, over and above the legislated solutions, Standard Bank offers the solutions below:
6 months reprieve on student loans post completion of studies
3 month payment break for unemployed consumers whilst looking for a job
Payment Moratoriums/ Payment breaks
Term extensions
Interest rate concessions
Arrears forgiveness
Suspension of monthly fees /charges
Restructures
Rates concessions and a lower single instalment (creating surplus for living expenses)
Debt Consolidation
Helps to realize more equitable proceeds than in an Auction process
For downgrading of assets to create affordability (VAF)
Bank assisted sale of property
Full balance write down for balances less than R1,000
Up to 20% discounted settlements for unemployed consumers who have received lump sum payouts
Up to 30% discounted settlements for special circumstances (unemployed / medically on boarded / consumers reaching pensionable age)
Settlements in special circumstances
Partial balance write down

12. Conclusion

13. Conclusion
Persistent over-indebtedness is unsustainable and contributes to negative social and economic outcomes. It is bad for consumers, for business as well as for the economy. It is essential that the needs of the most vulnerable over-indebted people are addressed. Solutions to this problem must be sustainable and be able to meet the needs of this group of people in the long term. All the proposed initiatives are dedicated to helping the vulnerable and those negatively affected by the current economic situation. In finding the appropriate solutions for over indebtedness, we should be cognisant of laws that will increase the financial exclusion of consumers in the long run; further marginalizing low-income consumers and increasing the cost of borrowing. As an organisation, we believe that reckless lending and unscrupulous practices should be dealt with through the reinforcement of existing laws. Standard Bank requests that we do not introduce new legislation to deal with illegal lending practices that are already legislated for but rather be tougher on enforcement. The addition of another law will not provide an integrated approach to resolving the issue of over indebtedness.

14. Thank You