1. NCA Introductory Workshop for BANKSETA and with Institute of Bankers Dr. Penelope Hawkins Dr. Penelope Hawkins F E A S i b i l i t Y February – March 2006 SESSION 3

2. FEASibilitY (Pty) Ltd NCA Workshop: Session 32 3. Debt enforcement & settlement, Information & phasing  Debt enforcement  Debt counseling  Dispute settlement  Information sources  Phasing in of NCA

3. FEASibilitY (Pty) Ltd NCA Workshop: Session 33 3.1 Debt enforcement  Steps before court action At least 20 days in arrears Consumer notified of default and of right to get assistance Court to enquire whether or not reckless Specified procedure for repossession of security  Responsible credit protected! Court must grant order if not reckless, irrespective of indebtedness level Debt restructuring if over-indebted and after Tribunal review

4. FEASibilitY (Pty) Ltd NCA Workshop: Session 34 3.1.1 Debt enforcement (cont.)  Courts: powers substantially increased re debt- related orders Review prior to debt procedures, debt restructuring (+ mechanisms to prevent irregular access to court orders)  Regulator Registration Monitor conduct (& report to parliament) Compliance Redress S13-16, S5455, S129/130, S138

5. FEASibilitY (Pty) Ltd NCA Workshop: Session 35 3.1.2 Debt enforcement (cont.) Regular decisions appealed to Tribunal  Tribunal orders appeal to High Court Magistrates bound by Tribunal orders Civil action: same issue not raised in Tribunal & civil court; Magistrates can deal with NCA matters, mechanisms to avoid conflict  Prohibited conduct vs. offense Prohibited conduct = contravention of Act, ex offenses Tribunal Offenses  Magistrate & High Courts S1, S129, S138, S148, S150, S164

6. FEASibilitY (Pty) Ltd NCA Workshop: Session 36 3.2 Debt counseling  Debt Counselors Assisting over-indebted consumers & facilitating debt restructuring Potential interventions:  Education & guidance  Voluntary debt restructuring, with consent order  Legal debt restructuring Registered & overseen by Regulator, independent from providers  Debt restructuring must be “stamped” by Magistrates court

7. FEASibilitY (Pty) Ltd NCA Workshop: Session 37 3.2.1 Debt counseling (cont.)  Consumer notified Before adverse information to credit bureaux; before debt enforcement procedures  Debt Counselors, ‘Alternative dispute resolution agents’, consumer courts and ombuds all play a role Debt counseling if over-indebted; debt review  debt re-arrangement  court order ADR where disputes (prior to court process) Complaints to regulator S86 – S88, S129, S130, S134, S136

8. FEASibilitY (Pty) Ltd NCA Workshop: Session 38 3.3 Dispute settlement  Can be “internal” – i.e. between the provider and the consumer  However, if provider offers rejected, then the court process will be opened again.  If consumer is not over-indebted, then outside the jurisdiction of debt counselors.

9. FEASibilitY (Pty) Ltd NCA Workshop: Session 39 3.4 Information “… weaknesses in relation to credit bureau activities … a key inefficiency in the consumer credit market”  Consumer information Curb unlimited ‘trade’ in private information Protect confidentiality S68 to S73

10. FEASibilitY (Pty) Ltd NCA Workshop: Session 310 3.4.1 Information (cont.)  Credit register National, non-competitive register to enable indebtedness assessment; not competing with bureaux  Credit Bureaux Exchange in information regulated; Bureaux registered; Responsibility for verification & accuracy, Regulation of purpose for which information released Consumer’s access to records, Correction procedure, Not report until dispute resolved Limited, defined “data cleansing process”

11. FEASibilitY (Pty) Ltd NCA Workshop: Session 311 3.4.2 Information (cont.)  Reasons for rejection of credit applications Prohibition of refusing credit on discriminatory grounds Right to reason for credit refused  Establishment of a “National Credit Register”, to curb over-indebtedness  Prescribed information will have to be submitted  However, note that reckless lending provisions are not dependent on the Register

12. FEASibilitY (Pty) Ltd NCA Workshop: Session 312 3.5 Phasing  Concurrently: Act signed by State President Regulations published for comment (until end March 2006)  Implementation phased in: NCA effective: 1 April 2006 Regulator: 1 April 2006 Registration of Credit providers: June-July 2006 Compliance with interest and other regulations: Q1 2007 Register – only when Minister announces it is up and running: 2007(?)

13. FEASibilitY (Pty) Ltd NCA Workshop: Session 313 3.6 Sources  Dti website – www.dti.gov.za/ccrdlawreview/research.htm

14. FEASibilitY (Pty) Ltd NCA Workshop: Session 314 Sessions 1-3 Question and Answer Session