Debt forgiveness on the cards

Government’s Trade and Industry Portfolio Committee are currently investigating possible changes to the NCA as part of their objective to provide debt relief for heavily indebted and low-income South African consumers. The proposed changes to credit law are expected to affect access to credit and the cost of credit as the Committee and NCR seek to help South Africans lighten the load.

A proposed debt forgiveness programme has been met with positive reactions as well as scepticism from various industry stakeholders. In March, a second round of deliberations has already commenced as parties met to discuss the way forward. Despite debt forgiveness programmes being implemented successfully in both developed and developing countries, many believe that this will simply plunge consumers deeper into debt and others believe it will have a lasting impact on our economy as banks and credit providers might suffer the consequences.

S&P Global publishes Sovereign Debt Reports

Earlier this month, the international ratings agency published their Global Sovereign Borrowing report along with regional trend reports. Its main findings once again confirmed that Japan and the US were the most prolific borrowers in 2016 and that we should be worried about global debt levels as it continues to rise. S&P Global predicted that the total outstanding global sovereign commercial debt stock will increase to an all-time high of $44 trillion at the end of 2017.

Its emerging markets trend report further noted an improvement in the negative outlook bias since June 2016. However, the negative outlook among the 20 major emerging market remains as they look to Brazil, China, Colombia, Mexico, South Africa, and Venezuela as the main culprits.

2017 Credit and Decision Analytics Conference: Pre-registration

Pre-registration to attend the third Credit & Decision Analytics Conference is now open. Hosted by the Compuscan group of companies, the annual industry event will be held at Arabella Hotel & Spa in Hermanus from 6-8 September 2017. This year, the 3-day conference will offer a number of breakaway sessions running alongside the jam-packed main conference to allow delegates more networking opportunities and access to more exclusive content. Tickets cost R10 999 (excl. VAT) and are inclusive of accommodation, beverages and food.

Contact Us to pre-register today

Credit life insurance rates capped

Since the final regulations on credit life insurance were gazetted on 10 February 2017, credit providers have until August to comply with the new legislation. The Credit Life Insurance Regulations require credit providers to take into account the actual risk and liabilities associated with the credit agreement. This includes the risk of the actual occurrence of events insured against and affects individuals or groups.

Furthermore, the regulations have placed caps on the insurance fees and will force credit providers to sell appropriate products specific to their clients’ needs (e.g. pensioners, disabled or self-employed individuals). This news has been met with positive reactions especially by consumer activists who argue that consumers have, up till now, been charged exorbitant rates.

The final regulations will set the following limitations on monthly fees:

  • Credit Insurance limit: R4.50 for each R1 000 owed (all credit excl. mortgages)
  • Ordinary mortgage agreements: R2 limit for each R1 000 owed (I.e. a mortgage agreement of R1 million would means that insurance would be capped at a maximum monthly premium of R2 000.)

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