National Credit Bill: finalisation and adoption

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
7 October 2005
NATIONAL CREDIT BILL: FINALISATION AND ADOPTION

Chairperson:

Department of Trade and Industry Possible Amendments to the National Credit Bill [6 October 2005]
Department of Trade and Industry Possible Amendments to the National Credit Bill [7 October 2005]
National Credit Bill [B18B-2005] - as passed by this Committee.
Portfolio Committee Amendments to National Credit Bill [B18A-2005]

SUMMARY
The Department of Trade and Industry (DTI) continued with its presentation of the proposed amendments to the Bill and highlighted the changes it had made to the Bill since the previous meeting with the Committee. The Committee unanimously adopted the Bill with amendments.

MINUTES
Clause 150
Ms A Ludin (DTI Deputy Director-General of Consumer and Corporate Regulations) said that the whole section was redrafted. The clause was simplified and limited the role of the Tribunal. Mr J Strydom, the DTI Law Advisor, added that the DTI had decided to give the power to grant declaratory orders to the normal courts.

Mr S Rasmeni (ANC) asked if there were any matters that the Tribunal had exclusive jurisdiction over.

Ms Ludin said that there was a split in the role of the Courts and the Tribunal. The Tribunal dealt with prohibited conduct. Courts dealt with offences, but they could become involved in matters such as debt enforcement and generally their role was expanded. It was important to remember that this split did exist to prevent situations where ‘double jeopardy’ could occur.

Clause 151
The words "subsection (1)" were omitted and substituted with "this Act."

Clause 152
The word "penalty" was omitted and substituted with "fine" in lines 50 and 52.

Clause 163
Ms Ludin said that the section that dealt with agents had to be reviewed. There was now a distinction between agents for credit providers and agents for consumers with specific requirements for both categories of agents.

Clause 164
Mr Strydom said that when drafting this section the DTI was careful not encroach on the civil and criminal domain of the Courts.

Mr M Stephen (DA) said that the section was wrong because it gave the Tribunal greater authority than the High Court as it removed the possibility of appealing a decision of the Tribunal in the High Court.

Mr Strydom replied that the legal status of an order of the Tribunal was the same as that of the High Court. Therefore, if the Tribunal made a decision, the Court should apply that determination as the forums had the same status. But this still did not remove the right of a party to appeal. None of the orders of the Tribunal were binding on the High Court.

The Chair said that he was worried about the wording of Clause 152. He asked why it was necessary to articulate that the Tribunal’s decisions had the weight of a High Court decision when it did not. It was important to draft the clause in a way that was clear.

Ms Ludin said that the DTI would rephrase subsection (2) by omitting "other than a review or appeal of a Tribunal decision" and inserting "other than a High Court."

Schedule 2
Ms Ludin said that all the words from "Act" in line four up to and including "members" in line 18 were omitted as requested by the National Treasury. Sections 43 and 44 of the Bill were repealed to the extent that the sections applied to credit agreements that were dealt with in the Short-term Insurance and Long-term Insurance Acts respectively. "A" was substituted with "As of 1 July 2006, a" in line ten. A new subparagraph was added after line 15 that dealt with the National Payment System Act.

All the words from "The" up to and including "rescind" in line 53 were omitted and replaced with "For the purposes of this Act, a credit agreement to which section 13 of the Credit Agreements Act, 1980 (Act 75 of 1980),] 121 of the National Credit Act, 2005 (Act No. XX of 2005) applies, [shall] will be deemed not to be a supply of goods and services [unless the credit receiver] if the consumer has [failed to] exercised the right to rescind [under that section to terminate the] that agreement in the manner and within the time permitted [permitted available to him under] by that section."

Ms Ludin said that some financial institutions had expressed their concerns about the application of these provisions but the DTI did not think that they would be unduly affected.

Ms B Ramodibe (ANC) asked what these institutions considered to be a reasonable period to implement the changes.

Ms Ludin replied that the institutions said that they could only apply the provisions once they had revised and changed their own systems. DTI’s recommendation was that the time-frames in the Bill be retained, and then individual concerns would be dealt with as they arose.

Mr Stephen asked why the time-frames were not dealt with in Regulations.

Ms Ludin replied that time-frames could not be dealt with in Regulations as the Minister of Trade and Industry had no authority to pass them. They had to go through the Treasury.

Schedule 3
Ms Ludin said that the change here was to insert "except that section 5(3) does not apply in respect of a pre-existing incidental credit agreement" after "date." The result of this change was to insist on consent before interest was levied on incidental credit agreements.

Clause 1 - Definitions
Ms Ludin said that the definition of "civil court" was omitted from line 38 on page eight as there was no need to define a Court in this Bill. The word "agreement was inserted" after "mortgage" in lines two and 47 on page nine; in lines 34 and 54 on page 17 and in lines one and five on page 18. Paragraph (d) was omitted from line 23 on page ten and was substituted with "affecting the consumer, a person who is dependent upon the consumer or a person for whom the consumer is financially responsible." The DTI also included a new definition for an ‘incidental credit agreement.’ The definitions of an ‘outstanding account’ and a ’prepaid transaction’ were omitted. "Wholly" was omitted and substituted with "principally" in line 14 on page 12. On line 15 "other than an act or omission that constitutes an offence under this Act" after "Act."

Clause 4
Ms Ludin said that "together with the combined asset value or annual turnover of all related juristic persons" was added after "turnover" in line 55 on page 14 and a new subsection was inserted after line 31 on page 15. Subsection (6) was omitted and replaced with "(6) For the purposes of this Act, if a consumer pays fully or partially for goods or services through a charge against a credit facility, which is provided by a third party, the person who sells the goods or services is not regarded to have entered into a credit agreement with the consumer merely by virtue of that payment." This brought subsidiary companies under the ambit of the Act.

Clause 5
This section was reviewed and replaced with a new one as the Committee had complained that it had been too cumbersome and confusing. Subsection (3)(b) was also added as a result of the concerns of the Committee that the clause gave credit providers the right to charge interest without the consent of the consumer.

Clause 8
The DTI inserted "or credit extended by an insurer solely to maintain the payment of premiums on a policy of insurance" after "insurance" in line 6 on page 17. A new formulation was added after line 45 on page 17.

Clause 10
These were merely technical amendments.

Clause 16
"Tribunal" was substituted with "a court" in line 50 on page 20.

Clause 19
After careful consideration of the Committee’s suggestion, the DTI added the words "at least two of whom must be knowledgeable on consumer matters."

Clause 27
Paragraph (c) was omitted from line 50 as declaratory orders were now in the domain of the Courts.

Clause 41
The changes here were technical in nature.

Clause 48
A new subsection was added as (c) that imposed the requirement on credit providers to register with the South African Revenue Services.

Clause 57
Subsection (2) was reviewed and redrafted and subsection (c) was added to section 57(5).

Clause 61
In line 38 on page 38, "primary or predominant" were omitted as there was no basis for unfair discrimination, while "which must refer the complaint to the Equality Court, if the complaint appears to be valid" was added after "136."

Clause 68
Here, subsection (2) was omitted and substituted with "(3) Failure by a credit bureau to comply with a notice issued in terms of section 55, in relation to this section, is an offence."

Clause 69
The reference to "a prepaid transaction" was omitted and replaced with" an incidental credit agreement." Subsection (6) was omitted and replaced with "(6) The Minister may prescribe alternative requirements, in place of any of those set out in subsection (2), with respect to developmental credit agreements."

Clause 70
Here, "(i) not knowingly or negligently provide a report to any person containing inaccurate information" was inserted after line 31 on page 43. Subsections (4) and (6) were omitted and substituted with new drafts.

Clause 71
On page 44 after line 24, "(6) After receiving a copy of a court order rescinding any judgement, a credit bureau must expunge from its records all information relating to that judgement." Subsection (6) was omitted and replaced with "(7) Failure by a credit bureau to comply with a notice issued in terms of section 55, in relation to this section, is an offence."

Clause 72
There were some technical changes here and the insertion of "to a registered credit bureau or to the National Credit Register" after "information" in line 51 on page 44. An addition was made as a new subsection (5) where "A Credit Bureau or the National Credit Register may not report information that is challenged until the challenge has been resolved in terms of subsection (3)(a) or (b)." Subsection (6) was omitted and substituted with "(6) Failure by a credit bureau to comply with a notice issued in terms of section 55, in relation to this section, is an offence."

Clause 73
A new section that dealt with the verification and removal of consumer credit information was added. Ms Ludin said that industry raised the concern that this clause was open to abuse by consumers, but the DTI believed that the system would sort out such problems. All laws were open for abuse. No single piece of legislation was totally fool-proof.

Discussion
Dr. E Nkem-Abonta (ANC) said that the clause was too open for abuse.

The Chairperson accepted Dr. Nkem-Abonta’s argument but commented that the clause imposed a responsibility to do due diligence.

Mr Stephen said that he was happy with the current formulation of the clause. It was fine the way it was. Due legal process had to be followed. People could not be prejudiced on the weight of mere allegation. Both sides had to have their cases heard in Court.

Ms Ludin said that the challenge was to ensure that the clause did not become a viable loop-hole. There was always the potential for abuse but here it was limited and there had been very little abuse of the credit system by consumers. All the abuse so far had come from the credit providers.

Clause 76
The changes here were mainly technical in nature.

Clause 77
This entire section was omitted.

Clause 89
The reference to prepaid transactions was omitted as well as a few technical changes.

Clause 90
These were technical changes.

Clause 93
These were consequential changes to the definition of incidental credit as well as section five.

Clause 104
This was a rephrasing of the section as requested by the Committee.

Clause 107
This was a consequential change to the definition of incidental credit.

Clause 108
This was a technical change.

Clause 111
This change was requested by the Committee.

Clause 121
These were consequential changes that removed references to the Tribunal.

Clause 123
The DTI proposed the deletion of the whole of subsection (2) but it was not a major substantive change.

Clause 125
This clause dealt with early cancellation charges and the section was reorganised to make it clearer.
Clause 130
References to the Court were expanded to allow a wider application of the Act than merely Magistrate’s Courts.

Clause 137
This was a technical change that related to initiating a complaint to the National Credit Register.

Clause 140
This was a rearrangement of what was in section 140(2)(b).

Clause 143
This was a consequential change to remove references to declaratory orders.

Discussion
Mr Rasmeni asked what the DTI’s final position was on the question of an amnesty.

Mr Strydom referred him to section 73(1) where many of the recommendations of the Committee in this regard were contained.

Adoption of the Bill
The Chairperson read out the motion of desirability and the report. The Committee passed the motion and the report recommending adoption of the Bill with amendments by the National Assembly.

The meeting was adjourned.