National Credit Amendment Bill [B47 -2013]: Committee's proposed amendments

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Trade, Industry and Competition

12 February 2014
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Committee met with the Department of Trade and Industry, parliamentary and state law advisors to go through the National Credit Amendment Bill looking only at Committee proposed amendments from clause 1 to 27.

Under clause 1 there were amendments to the definition of “lease”. This came out of the public hearings to clear the confusion between financial leases and rental agreements. There was an amendment to the definition of “mortgage” as well as the insertion of “Payment Distribution Agent” (PDA). Discussion was flagged on whether PDAs where natural or juristic persons but at the end of the meeting the Committee decided that PDAs could be natural OR juristic persons. There was an amendments to the definition of “secured loan” following from the public hearings and a distinction between secured loans and mortgage bonds.  There was slight amendment to the definition of “mortgage agreement” and “regulated financial institutions” to include non-deposit taking financial institutions as requested by the SA Reserve Bank.

Clause 3 was amended with the substitution of “official” with “employee” for the purposes of alignment and consistency.

Clause 5 dealt with registration of PDAs as contained in section 44A(1) and Members discussed the possible duration for “experience in the payment industry”.

Clause 6 was amended with the substitution of “probity” with “fit and proper”. There was also a concern about the word “investigations”.

Clause 8 stipulated further registration criteria relating to codes and guidelines as contained in section 48(1)(a). The Committee felt this was an important amendment, as people should not be given a choice which the previous word “guidelines” implied which was removed. Members were concerned and cautioned against the industry bringing in their own code. Instead there should be a prescribed code.

Clause 11 added requirements for voluntary cancellations. There was the substitution of “debt counsellor” with “registrant”. With the clearance certificate, the onus would now be on the credit provider and not the consumer.
Clause 13 dealt with adverse payment profiles and the Committee debated whether the payment profile/information should remain if the individual was rehabilitated.

Clause 16 amended appeals to the tribunal. The Act was given more teeth by an amendment adding sanctions in that “a person who contravenes this section is guilty of an offence”. The Committee discussed the capping of credit insurance. It was decided that caps should be prescribed as the cost of credit insurance should not be unreasonable for the consumer.

Clause 20 amended section 129 following a Constitutional Court judgment and the need to make a distinction between payment disputes and other disputes. The clause amended how notices would be delivered to consumers with the Committee discussing the reliability of email and fax. Whatever choice the consumer made for notification, should be under signature of the consumer.

Clause 27 spelt out prescribed training requirements and the allowance for discretion. This came from the public hearings and the Committee decided that the Minister should prescribe the minimum core requirements of training.

The outstanding issues included emolument orders which the Committee decided not to follow through with as the consultation required with the Minister of Justice would delay the passage of the Bill which went against the people the Bill was targeting.

The Department also proposed that amendments be made to the Long Title of the Bill; to change “National Credit Tribunal” to “National Credit Consumer Tribunal”; to allow for all credit matters to be regulated by the National Credit Regulator (NCR); for a 21 day grace period for the automatic lapsing of registration renewals; governance of the NCR; and getting rid of boards to govern the regulatory agencies as the boards hindered effectiveness and efficiency. The Committee asked that the Department return with more detail for alternative models of governance for the regulatory agencies.

Meeting report

Proposed Amendments to National Credit Amendment Bill
Clause 1
Adv Charmaine van der Merwe, Parliamentary Law Advisor, noted which parts of the definition of “lease” under section 1(d) would be deleted and which would remain. The concern with these changes, as highlighted in the public hearings, was that if transfer of ownership were removed there could be confusion between a financial lease and a rental agreement along with tax implications.

Mr McDonald Netshitenzhe, Chief Director: Policy and Legislation, DTI, felt deletions to this clause were no longer needed.   

Adv van der Merwe moved to 1(b) and the definition of “mortgage” noting the incorporation of the proposed definition of the Banking Association South Africa (BASA).  

Mr Netshitenzhe noted the Department agreed with BASA’s proposed definition.

Adv van der Merwe noted the insertion of a definition for “payment distribution agent” under 1(d) – “payment distribution agent means a person who on behalf of a consumer, that has applied for debt review in terms of section 86(1), distributes payments to credit providers in terms of a debt re-arrangement court order or an agreement”.

Mr Netshitenzhe proposed the insertion of “or tribunal” after “court order” to this definition. 

Mr D Swanepoel (ANC) asked if the definition for “person” included an entity or company. He understood that payment distribution agencies (PDAs) were companies.   

Adv van der Merwe noted that PDAs could be natural persons. “Person” was not defined but if used, it would automatically mean both natural persons and juristic persons. She would add this to make the clause clearer.

Mr Netshitezhe thought PDAs should only be juristic persons.

The Chairperson sought an explanation on why this was the Department’s position.

Mr Lesiba Mashapa, Company Secretary: National Credit Regulator, explained DTI’s policy position was that only juristic persons could be registered as PDAs because of their operations. PDAs needed to be proper organisations which could be audited and must have extensive capacity for capital requirements and financial systems.

The Chairperson flagged this issue to get an opinion from the Committee’s own consultant.  

Adv van der Merwe noted the amendment to the definition of “secured loan”. Out of the public hearings it was felt the word “movable”, which was removed from the definition, should remain in order for there to be a distinction between a secured loan and a mortgage bond. Thus “movable” would be reinserted and the definition for secured loan would read – “retains, or receives a pledge to any movable property or other thing of value as security for all amounts due under that agreement”.

Mr Swanepoel asked if investments, unit trusts or policies were considered movable property.

Mr K Marais (DA) wanted to know about a bond which was registered but was not a mortgage loan or bond as security for a loan. He was concerned about the limitation to movable property only and the effect of this on the general practice

Mr G McIntosh (COPE) noted this was a notarial bond which was a form of security for bonds for overdrafts. 

Adv van der Merwe explained there were types of mortgage bonds such as a covering bond. Mortgage bonds and security loans were overall terms.  

Mr Marais noted the definition was only in terms of a credit agreement. 

Mr Swanepoel knew a cession would be signed for a policy while for an investment a pledge would be signed. 

Adv van der Merwe highlighted the definition of “mortgage agreement” which was going to be slightly amended. A mortgage agreement meant “a credit agreement that is secured by the registrar of deeds over immovable property”.

Mr Swanepoel repeated his question was whether investments and policies were considered immovable property. 

Adv van der Merwe indicated that they were not. Notarial bonds, not mortgage bonds, would be registered over investments and policies.

For “regulated financial institution”, the SA Reserve Bank had asked to amend the definition to include non-deposit taking financial institutions.  Such an amendment would still need to be drafted.

To follow process, the Chairperson asked the Committee if they would give the mandate to the advocate to draft such an amendment. The Committee agreed to this.

Mr Netshitenzhe said the Department did not agree with the definition.

Mr Mashapa explained the reason for disagreement was to ensure coordination and the intention was never to include non-financial institutions.

Mr G Selau (ANC) suggested the definition be flagged.

The Chairperson agreed with that. The draft arrangement would go ahead and the Committee could get further interpretation from DTI as well. This was not an agreement to the proposed amendment but at this stage was simply a work in progress.

Clause 3
Adv van der Merwe noted the amendment to substitute “official” with “employee”. This would allow for alignment with the Act and for consistency.

Mr Swanepoel asked why they had skipped over Clause 2.
The Chairperson explained the Committee were only looking at the proposed amendments

Clause 5
Adv van der Merwe turned to the registration of PDAs noting the draft insertion of “with three year’s experience in the payment industry” under 44A(1). 

Mr Marais said only a natural person could have experience and a juristic person could not have experience. This came back to the problems with the definition of “person”. 

Mr B Radebe (ANC) was concerned that many new graduates would be excluded by the limitation of three years’ experience.

Mr Swanepoel thought it was debatable whether a juristic person could have experience – he thought they could. A special purpose vehicle may be set up or a new company out of companies that did have experience in the payment industry. It might then be appropriate to say “necessary technical capability or skills” instead of “experience”,

Mr Marais agreed and noted this was the general sentiment of the Committee and suggested a slight rewording to the clause to convey that.

Mr Netshitenzhe said the requirements for registration of PDAs should be noted in the Bill and appear in the regulations issued by the Minister.

Adv van der Merwe would first need to understand what that meant. She would flag the issue.

The Chairperson agreed. The substance of what DTI wanted was clear but the drafting needed to be correct.

Adv van der Merwe pointed to the addition of a clause to explain what PDAs needed to do in the course of being registered. Alternatively this could be contained in the regulations. The proposed section would read: “payment distribution agents must – (a) maintain fidelity insurance and trust accounts; (b) be registered under the National Payment System Act, 1998 (Act No. 78 of 1998); and (c) submit such financial accounts as may reasonably be registered by the National Credit Regulator for purposes of a financial audit”. Another issue to consider under this section was whether PDAs could register as debt counsellors. 

Mr Netshitenzhe felt this section would need to be in the regulations or be included under conditions for registration. This was the Department’s request.  

Mr Marais noted many issues could be included in the regulations but it should not be overlooked that some issues needed to be contained in the Bill.

The Chairperson accepted this principle.

Clause 6
Adv van der Merwe noted the amendment to substitute “probity” with “fit and proper”. There was a concern with the word “investigations” which might be confused with investigations after a complaint was filed.

Mr Netshitenzhe agreed with the use of the term “fit and proper”. To avoid confusion, DTI suggested s45(3)(b) be removed.

Adv van der Merwe felt that would not be a problem, as a ‘fit and proper’ test would require an investigation anyway.

Clause 7
Adv van der Merwe said the entire section would have to be flagged as it depended on whether it was a natural or juristic person. This was agreed to. 

Clause 8
Adv van der Merwe explained the clause dealt with further registration criteria relating to codes and guidelines. The proposal was, under section 48(1)(a), change the word “consider” to “apply the following criteria in respect of the application”. The clause would then read – “if a person qualifies to be registered as a credit provider, the National Credit Regulator must further apply the following criteria in respect of the application…” The other issue to consider was the use of the term “guideline” in this section, as it could be open to wide interpretation.

The Chairperson felt this was an important point because the intention was for people to pursue a line of behaviour and not to have a choice. Guideline would then not be the most suitable word at all.   

Mr Marais thought this was where the regulations needed to come in as the criteria might change over time. He proposed the use of the word “criteria” as opposed to “guideline” as it set conditions.

Mr Radebe agreed about removing “guideline” and replacing it perhaps with “prescribe with the prescribed code of conduct”. 

Mr Netshitenzhe agreed and with the idea of codes which could be done by the industry itself but the Minister himself could come with prescribed codes which were binding, as advised by the national regulator.

The Chairperson noted everyone was in agreement that the word “guideline” was now completely out.  

Mr Radebe was concerned about codes and the idea of the industry bringing in their own codes which would bring the process back to square one.

The Chairperson said this could not be watered down. This was why the Department had brought the Amendment Bill because people were running around doing their own thing. This would be no more. There would be a prescribed code.

The Chairperson noted the important letter to the Speaker enabling the Committee to make amendments to sections not contained in the Amendment Bill. This was the correct process to undertake.

The Committee Secretary proceeded to read out the proposed amendments needing permission. 

Mr McIntosh questioned what happened if the Speaker was unhappy with the proposed amendments. 

The Chairperson replied that this was taken into account. If there was no agreement, the proposed amendment would come out of the Bill so as not to impede the progress of the main thrust of the Bill and its intentions.

She noted this was a technical process which needed to be undertaken that was not undermining the Committee. This was National Assembly Rule 249(3)(b): if it is a bill amending provisions of legislation, may seek the permission of the Assembly to inquire into amending other provisions of that legislation. The Committee had followed this process with every piece of legislation that had come before them and it must be kept in mind that this was done as a precaution. The Committee had once burnt its fingers with the Intellectual Property Bill by not following all the technical steps. The result was a delay of six months just because they had missed out one step. She was now conscious of the rule and trying to dot the I’s and cross the T’s or err on the side of caution. She hoped she had the support of all Members of the Committee.

Mr Marais requested a copy of this letter to the Speaker.

Mr Netshitenzhe returned to issue of prescription, noting the policies of the Department and that the Bill had been subjected to all consultation processes throughout all nine provinces and prescription was contained in the policy.

The Chairperson felt the matter had been discussed at length and in depth yesterday and she did want the issue reopened at all.

Mr Marais questioned, for clarity, if the determinations were not supposed to be made by the NCR or if it was preferable for the Minister to make these determinations.

Adv van der Merwe responded that delegation could only go to the Minister but, as with any other piece of legislation, reference to the Minister was actually referring to the officials on the ground. The National Credit Regulator (NCR) would then develop the determinations and the Minister would make the final sign off while in practice the Minister would see only the final document. The terminology, however, required that the Minister did that.   

Clause 11
Adv van der Merwe turned to the additional requirements for voluntary cancellations noting the substitution of “debt counsellor” with “registrant” which applied to natural or juristic persons. This should further not be limited to voluntary cancellations but situations where a business had been deregistered because of compliance finding. The same process should then apply to deregistered companies.

The next amendment was to section 71 of the principal Act which dealt with the clearance certificate that was issued. The onus was now on the credit provider and not the consumer.  There was a change in this section to the re-arrangement of debts.   

Mr Netshitenzhe was not in agreement with the drafting in this section. 

The Chairperson asked if an individual could get a clearance certificate, under DTI's proposal, even if the individual still had outstanding debt.

Ms Zodwa Ntuli, Deputy Director-General: Corporate and Consumer Regulation, DTI, explained the proposal was for an amendment to the current requirement for an individual to pay all their debt under a rearrangement which became impossible when there was a rearrangement on the bond. The proposal, from the Department, then was for early rehabilitation where the only outstanding payment was on a bond. This was the intention of the policy and the drafting should display this intention.

Adv van der Merwe then noted the proposal to use section 71(2) to incorporate some of the public comments and to state that – “a debt counsellor must for the purposes of the demonstration envisaged in subsection (1)(b), apply such measures as may be prescribed”.

Also the section 71(4)(a) proposal was to omit “or any credit bureau” and substitute it with “and all registered credit bureaus”. The clause would then read – “a debt counsellor must within seven days after the insurance of the clearance certificate, file a certified copy of that certificate with the national register established in terms of section 69 and all registered credit bureaus”.

Clause 13
Adv van der Merwe highlighted the proposal to omit “a” under section 71A(1)(c) and replace it with “an adverse”. This would refer to a specific payment profile. 

Mr Swanepoel did not think one could refer to an adverse payment profile. The question was whether payment profile should stay in the clause or be removed.

The Chairperson thought the amendment would be to omit profile and replace it with information. She asked for clarity from DTI on the matter. 

Mr Marais thought the idea was, in the specific case of people who had been rehabilitated, to have their adverse payment profile/information removed otherwise they would not be able to access credit in the future. This applied to summonses, court orders etc.

Mr Radebe agreed with Mr Marais because the very purpose of the Amendment Bill was to ensure that a greater number of SA citizens were able to participate in the credit market and for this reason the adverse payment profile/information should go.

Mr Swanepoel said, simply, an adverse payment classification was in words while an adverse payment profile was in numbers so Mr Marais was correct.

Ns Ntuli indicated the intention was, where the consumer had met the obligations, the information should not stay but be removed immediately. The payment profile however could stay because it afforded credit providers the ability to assess the risk of lending. However, a payment profile could have a negative listing. A payment profile would, ideally, contain current listings and payment. Other information must be removed which was the intention of the proposal.  

Mr Radebe agreed with such an amendment.

Adv van der Merwe needed guidance on this removal of adverse listings and the alignment of regulations to provide transitional provisions – should there be transitional provisions and how would this be aligned with section 71A?

Ms Ntuli noted that, from discussions, DTI felt there should not be transitional provisions. The issue would be taken care of through the notice for the removal of adverse information to be issued by the Minister to credit bureaus. It was agreed that if the legislation was amended, there should be alignment with the regulations which should be amended as well.

Clause 15
Adv van der Merwe noted that because of the large number of amendments to this clause, the proposal was to insert a new clause 15. 

Ms Ntuli thought the regulator, as it proceeded to regulate the market on an ongoing basis, should have the power to issue guidelines which were not binding, with the intention of industry compliance. This power should not be removed or amended. DTI was introducing the affordability assessments that must be prescribed by the Minister after due consultation processes. The second element was the industry codes and to allow the industry to propose, through the NCR, through the Minister, to approve their codes.

Mr Netshitenzhe added the intention was not to take away power from the NCR to guide compliance of the industry. If the guidelines were to develop into regulations, the NCR would approach the Minister for their issuing.

Ms Ntuli confirmed that amendments were not proposed to the regulations – it was fine the way it was so there should not be an issue. 

The Chairperson asked Ms Van der Merwe that this be made quite clear especially the affordability.

Adv van der Merwe said she would ensure there was a clear distinction between documents made by the Minister and documents made by the Regulator.

Clause 16
Adv van der Merwe said this clause dealt with appeals of the Tribunal. There was the proposal for the addition of, to section 83(5)(h) – “a decision by the Tribunal in terms of this section is subject to appeal to, or review by, the High Court to the extent permitted by section 148”.  She needed guidance on whether transitional provisions were needed for this insertion.

Ms Diane Terblanche, Executive Chairperson, National Consumer Tribunal, said the provisions were already provided for and the type of appeal or review was not limited to come before the Tribunal. Reckless credit matters would come by way of referral from the credit regulator in any event or a non-referral in the event of no prosecution.

Ms Ntuli asked if this applied if a consumer contacted the Tribunal directly.

Ms Terblanche said this event was covered through the provision of “any matter/any hearing” before the full Tribunal.

Mr Swanepoel asked what would happen if there was not a full panel of the Tribunal. 

Ms Terblanche explained the Act prescribed which matters came before a full panel and which matters were heard by one person. In the case of the latter, this was largely where settlements were reached or for ordinary procedural matters. Any disputes were heard by a three member panel which were the ones typically taken on appeal or review.

The Chairperson asked if there was provision for if a member of the panel was sick, had left or resigned. Then how was a third panellist sought? She could not recall the actual legislation.

Ms Terblanche explained that another member could be allocated otherwise the matter could be heard by the two remaining members. A full panel, then, was simply more than one person. 

Adv van der Merwe moved on to the amendment to section 100 of the principal Act with the addition of – “a person who contravenes this section is guilty of an offence”. The sanction was provided for in section 161 of the Act.

The Chairperson noted this gave the Act more teeth.

Adv van der Merwe said the next issue needing guidance from the Department was whether the cost of credit insurance should be capped and where this would be provided for. The value of the credit insurance policy was capped under section 106.

The Chairperson noted this was one of the clauses referenced in the letter to the Speaker because it was only in the principal Act not in the Amendment Bill as introduced. 

Adv van der Merwe noted this was correct and some public involvement on this clause would be incorporated. She emphasised the issue at hand was the value and not the cost of credit insurance and the proposal was to cap the monthly premium.

The Chairperson said this was a serious matter and everyone needed to understand it.

Ms Ntuli said it was possible to prescribe the caps and it was clear the cost of the insurance should not be unreasonable to the consumer. Section 106 and 101 explained this costing. This might not require an amendment but could just be adjusted in the regulations.

The Chairperson noted the request had already gone to the Speaker but nevertheless it was best to err on the side of caution with this letter.

Ms Ntuli said it was not problematic if this amendment was included and it might be for the best to make it clearer through a better legal basis. 

Adv van der Merwe was concerned that it was just a general catchall phrase which was not wide enough given that this dealt with delegated legislation. The industry could challenge the section as being ultra vires. 

Clause 20
Adv van der Merwe noted most of the amendments to section 129 were following the Constitutional Court judgement referred to in yesterday’s meeting. One of the amendments was to 129(a)(i) and the change of “may” to “must” in line with the Court’s judgement. Another amendment made the distinction between the disputes referred to in 129(a)(i) and (ii) clearer – now (i) would refer specifically to payment disputes while (ii) would refer to “any other dispute relating to the terms of the credit agreement”. Guidance was needed on whether 129(a)(ii) should be further amended to draft the intent for the parties to resolve disputes. 

Ms Ntuli understood this and thought it made the clause clearer. 

Adv van der Merwe moved onto section 129(3) and the substitution of “re-instate” instead of “revive”. 

The Chairperson noted the intention was quite clear in this clause now.

Adv van der Merwe said the next amendment was an insertion at the end of section 129 for the delivery of notice. It had been pointed out that the word “delivered” was not explained. The insertion would now do so and align it with the Court judgement.  The insertion would read – “The notice contemplated in subsection (1)(a) must – (a) be made available to the consumer through one or more of the following mechanisms: (i) track and trace registered mail;(ii) fax; (iii) email; (iv) at the business premises of the credit provider; or (v) at any other location designated by the consumer but at the consumer’s expense; and (b) be delivered to the consumer in the manner chosen by the consumer from the options made available in paragraph (a)”.

The Chairperson was happy the track and trace option was there as there were problems with faxing and emailing. This showed the intention of the Court although she sought clarity on “at the consumer’s expense”.
Adv van der Merwe explained that this applied to any involvement of costs outside of normal posting such as if a courier were used. The decision on the choice of delivery was up to the consumer.

Ms Ntuli was pleased this section was now clearer. 

Adv van der Merwe noted this proposed draft was taken from section 65 of the principal Act although the track and trace option was only applicable to section 129(1).

An DTI official questioned whether it was enough that there was a mere dispatch of notice to consumers or should consumers indicate having received the notice. This would have to be checked.

Adv van der Merwe responded that there was a judgement on this from a 2012 case heard by the Constitutional Court dealing with getting a consumer trapped in litigation without the consumer knowing what was going on. It was not enough to send the notice by registered mail but to at least know the notice got to the post office where the consumer lived. She suggested this definition of “delivery” be added to this section.

Mr Radebe thought the fax and email options fell far short given that emails could be hacked and were subject to other problems. With a fax, anyone could carry the fax away. He suggested the fax and email options be removed. 

Ms Ntuli conferred. She thought specific provisions were needed in this regard.

The Chairperson recalled traffic offences and the issuing of summons where the driver would have to sign for the issuing of a summons so that it was clear and there was proof of receiving it. There was no guarantee that consumers received notices through fax or email. She thought caution was needed on this matter as the people who did not have fax or email were probably the ones being undermined here.

Adv Mongameli Kweta, Senior State Law Advisor, thought the Committee needed to consider 129(5)(b) which stated, “in the manner chosen by the consumer from the options made available”. Thus a consumer would not choose fax if s/he did not have a fax machine and the same for email. 

The Chairperson heard this but felt the choice of the consumer should be under signature. 

Ms Ntuli thought these points needed to be considered. On a practical level, unfortunately the majority of consumers did not know they had a choice. Sometimes consumers were abused and the emphasis was on a mode of delivery which protected the consumer. The Department would come back to the Committee with a proposal.

The Chairperson agreed and thought the clause needed to be tightened up. 

Clause 25
Adv van der Merwe this was an amendment to section 140 for a completely new insertion dealing with non-referral notices. The insertion would read – “after completing an investigation into compliance, the National Credit Regulator may take any enforcement action provided for in this Act, including but not limited to – (a) issue a notice of non-referral to the complainant in the prescribed form where the outcome of the investigation does not require a referral contemplated in paragraphs (b), (c) or (d)”.
Ms Ntuli recommended this proposal be abandoned because the original intention of section 140 was to expand the powers of the NCR which was then not proceeded with in the Bill.

Adv van der Merwe indicated that the whole of the proposed insertion would now be removed as it did not add anything to the legislation.

Clause 27
Adv van der Merwe explained this clause dealt with prescribed training and the allowance for discretion in this regard under section 171.

Mr Radebe thought “may” should be replaced by “must” under the amendment to this section.

The Chairperson noted the concerns of the Committee came from the public hearings and it was something worth the DTI considering as critical issues of training within the regulations.

Ms Ntuli understood these concerns and the Department saw gaps in training. The use of “may” allowed the Minister to intervene in cases where training was not happening as it was supposed to. It allowed for prescription of training. However the suggestions of the Committee for using “must” could be considered. 

Mr McIntosh understood where Members were coming from but he was concerned that the Committee was now loading the Minister with very serious and onerous responsibilities for prescribing training. There were differences in training between a chartered accountant and a debt advisor. He thought “may” still empowered the Minister considerably and if the DTI was more comfortable with “may” so was he.

The Chairperson was looking at the matter slightly differently. She thought there could be core requirements which the Minister could prescribe to be present in all training courses. Obviously the Minister would not be doing the work “directly” as it would be delegated and the Minister would sign off on what was done. Were there not certain core minimum requirements for debt counsellors?

Ms Ntuli got the message. The Department would look at the phrasing.

Ms Nomsa Motshegare, NCR CEO, pointed out that debt counsellors were required to go through a specific course as outlined in the regulations.

The Chairperson said the National Assembly debate on this Bill had been shifted from 20 to 25  February.  Everything would have to be finished on Tuesday 18 February after the Bill had gone to the printers.

Emolument orders
Adv van der Merwe noted the National Credit Act would need to be amended in line with the Magistrates Act for the Minister of Trade and Industry to issue emolument orders in conjunction with the Department of Justice, through regulations. Before this could go ahead, consultation was needed with the Minister of Justice.

The Chairperson noted the Committee wanted to avoid those sorts of processes as it delayed the passage of the Bill. Delays went against the interests of the people the Bill was targeting.

It was agreed this section would be omitted but it would be reflected in the Committee’s report or debate as an issue which was considered and was something the Committee would have liked to pursue but as a Section 76 Bill the passage of time was too short. Emoluments were such an important issue. The Chairperson saw Members were disappointed as this was not the Committee’s first choice. The amendment could go ahead if there was a way of not delaying the processing of the Bill. 

Outstanding Issues
The Chairperson raised outstanding issues needing resolving. The first was about natural or juristic persons.

Adv van der Merwe noted this was a Committee decision as it was a policy issue as there was no legal basis for natural person being excluded from being a PDA. To date, the instruction was that PDAs could be natural persons.   

The Chairperson asked what DTI had originally.

Ms Ntuli said juristic persons could never be debt counsellors meaning a debt counsellor was a practice for natural persons. If a corporate entity had the structures to meet being a PDA that structure was not precluded from being a PDA. This was the Department’s position which she would like to maintain if the Committee agreed.

The Chairperson felt this issue was now clarified.

Mr Swanepoel understood that DTI wanted a juristic person because when it came to the systems required for making of payments etc, this was expensive and not something which individuals could easily do in practice. In theory, a billionaire with all the resources could do so which meant a natural person could not be precluded. This opened up a philosophical debate when it fact PDA could only be juristic persons. 

The Chairperson said then a PDA could be a natural OR juristic person. 

Mr Selau thought PDAs should be juristic persons but a natural person was part of a company and so could not be precluded.

The Chairperson heard this but there were two separate entities. 

Mr McIntosh asked the Department, specifically Mr Netshitenzhe, why he was so concerned about excluding a natural person.

The Chairperson wanted to know from Members whether they wanted to remain with natural OR juristic persons or were they not in a position to take a decision as it involved quite a few amendments within the Bill which Adv van der Merwe and the Department would have to do.

Mr Radebe thought the Committee needed to apply its mind thoroughly given the point raised by Mr Swanepoel of excluding people who had the capacity and money to be PDAs. 

The Chairperson thought they could go this route but she would have liked to resolve the issue as it involved many consequential amendments throughout the Bill.

Mr Swanepoel thought DTI’s view was needed for the Committee to really take a decision. The Department might be seeing something Members were not and which he would like to hear. The control did not lie in whether a PDA was a natural or juristic person but whether they had the skills, systems, ability and finance.

Ms Ntuli said the policy position of the Department was that the requirements to be a PDA should be the conditions determining who could be a PDA or not.  It was clear that a credit provider could not be a PDA or debt counsellor. The Department had actually discussed prohibiting credit providers from owning shares in PDAs which was an inherent conflict.

The Chairperson would like the Department to draft something on that.

The other issue to have come up in public hearings was the choice of the consumer on how their funds would be distributed.

The Department would follow up on this.

Further grammatical and wording amendments still needed were highlighted. 

Long Title & Schedule
Mr Netshitenzhe turned to the Long Title/Preamble of the Act. The Department wanted the name “National Credit Tribunal” changed to “National Credit Consumer Tribunal”. In the Schedule, a technical/consequential amendment was sought.

Adv van der Merwe was not sure if permission was needed for this amendment.

The Chairperson asked the state law advisor if the Committee was allowed to make this amendment.

Adv Kweta indicated it would be allowed because there had been engagement by the Department.

Mr Netshitenzhe highlighted the next amendment by the Department was for all credit matters to be regulated by the NCR. He then looked at penalties going to the fiscus.

The Chairperson noted the issues highlighted by the public and by Members at yesterday’s meeting. The Committee was therefore of the view that this was not a great idea and the money should be put into the fiscus.

Mr Netshitenzhe turned to automatic lapsing of registration renewal, noting a section would need to be drafted making provision for a grace period of 21 days followed by an administrative penalty which was allowed in most legislation. This was raised by the auditors. 

The Chairperson asked Members if they wanted this in the primary legislation.

Mr Selau suggested this principle should be in the legislation without going into detail on the number of days or penalties.

Mr Netshitenzhe said the penalty would then be handled administratively.

The Chairperson said the main focus was to capture the principle in the legislation and other variables could be addressed in secondary legislation. It should not be forgotten that regulations were secondary legislation.

Mr Netshitenzhe said there was still the issue of governance of the NCR as raised in the public comments.

The Chairperson asked if there was an amendment already related to governance.

Ms Ntuli indicated that it was not in the Bill but the policy position was there.

The Chairperson was worried that the signed letter had already been sent to the Speaker requesting permission for amendment of certain issues. The matter of governance was important and needed to be addressed but this needed to be balanced with the timing for the passage of the Bill. She would see what she could do although the House would not take kindly to the Committee doing additions on a daily basis. One addition may be condoned but it should not be made a practice during this Bill. The Department was to address the issue.

Ms Ntuli apologised that the issue was not brought to attention before the letter to the Speaker went through. The omission was regrettable. The Department was looking into the rationalisation of agencies and determining the best structure to make the regulatory agencies more effective, efficient, allow for speedy decision-making and for sufficient governance as with other entities. The Department had decided that boards were not the best structure for doing things. Treasury had agreed with this. The boards as structures became a hindrance in the implementation of legislation. This applied to all regulatory agencies and it was felt the legislation should display this policy intent. 

The Chairperson asked Adv van der Merwe to draft this amendment as a matter of urgency.

The Committee agreed with the amendment in principle.

The Chairperson asked what structure the board would be replaced with. She wanted this clarified.

Mr Swanepoel asked if the proposal was to do away with the board and replace it with a commission or do away with the board completely.

Mr Radebe thought there must be a mechanism to ensure there was no impunity when the regulator was left on its own. He wanted the proposal to be clear by the next meeting on Tuesday 18 February.

Mr McIntosh noted DTI were faced with many difficult boards but would having a commission make it easier for the DG to “crack the whip” if someone was not observing the correct protocols and policies? Was this what lay behind the concern?

Ms Ntuli explained it was not so much what lay behind the difficult boards but what the functions of the regulatory authority were. Treasury had done an assessment of this. Some entities within DTI would still retain a board but not the regulatory agencies.

Mr Radebe thought this issue was summarised. He hoped there would be a model by Tuesday on the way forward.

The Chairperson requested a totally cleaned up Amendment Bill with a separate document detailing alternative models for the board as this was the one matter which had not been discussed in detail. The fact that staff had to leave early for the State of the Nation Address would make working difficult but there could be no excuse whatsoever for not bringing the Committee a clean document by Monday afternoon so that the Management Committee (Manco) could determine what it wanted. The Committee would next meet on Tuesday 18 February.

Mr Radebe said the ethic of the Committee was that they were not afraid to work so the Department could come on Friday but a principled decision had to be taken at the next meeting on Tuesday. 

The Chairperson noted the Committee always met on Tuesdays anyway. She was concerned about not getting a clean Bill by Friday or getting poor quality work. She made it clear to the Committee Secretary that if this deadline was not met, the National Assembly could not debate the Bill on the 25th so it had to be out and on the Order Paper by the 21st.

The Committee Manco would first meet before the Committee did.

The Committee agreed.

The meeting was adjourned.

There was a standing apology from the DA for Mr G Hill-Lewis and Mr W James and a standing health apology for Dr M Oriani-Ambrosini. Other apologies were for Mr A Albert (FF+) while Mr Kobus Marais asked to be excused from the meeting at 12h00. 


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