National Credit Regulator 3rd quarter performance & 2016 Annual Performance Plan; Remote Gambling Bill process

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Trade and Industry

15 March 2016
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Remote Gambling Bill was until recently being dealt with in a subcommittee of the Portfolio Committee. However, the subcommittee was not being attended by members regularly and had only met twice this year and the Chairperson had therefore brought it back to the main Committee to be dealt with effectively.

The Committee received a briefing from the National Credit Regulator on its Strategic and Annual Performance Plan; and its third quarter performance report. A major issue raised by the Chief Executive Officer of the National Credit Regulator (NCR) was the indebtedness of consumers, and specifically over-indebtedness as there are approximately 10 million South Africans that are indebted. The total rand value of new credit granted in the last year was R123.93 billion. The Committee had made mention of debt forgiveness as a possible way of easing the burden of debt on consumers. However, this could not be a blanket policy and the NCR needed to conduct research of countries that had instituted similar debt forgiveness programmes in the past to learn from their experiences. It was also noted that not all South Africans should be granted debt forgiveness, and that this should probably be reserved for those in the low income group. The NCR will report back to the Committee on the results of this study on 15 April 2016.

Members were concerned about credit providers who contravened the National Credit Act and its amendments, such as retailers who were taking people’s IDs when extending credit to them. Another huge concern was the general problem with investigations completed by the NCR where there was no follow up or action from the bodies that are tasked to do so. This was dangerous as it created the impression that there are not any consequences for those contravened the National Credit Amendment Act. The Committee had asked the Chairperson to request that the National Consumer Tribunal be invited to brief the Committee on such contraventions placed before them.

Meeting report

Remote Gambling Bill process
The Chairperson asked Mr Mkongi, the chair of the subcommittee on the Remote Gambling Bill to give the Committee an update as to what is happening with the Remote Gambling Bill.

Mr B Mkongi (ANC) said that, as the subcommittee had reported, the problem of lack of action had already been adjusted. However, the subcommittee could not meet in the previous week, given the constraint that some members were absent from the subcommittee. Since the subcommittee had not been able to meet often, the matter was still on hold up until the point that the subcommittee could meet.

The Chairperson said that she had referred to this issue in the Committee’s last meeting and had made it clear that the Mr Hill-Lewis had asked to step down out of the subcommittee. She asked Mr Hill-Lewis to correct her is she was wrong in this regard, so that it could be correct on the record.

Mr G Hill-Lewis (DA) said that she was wrong, as she had asked Adv Alberts to go.

The Chairperson confirmed that Mr Hill-Lewis had declined and Adv Alberts would go to the subcommittee. She asked Mr Mkongi what changes the ANC had proposed.

Mr Mkongi gave the changes to the ANC representation on the subcommittee [inaudible].

Mr D Macpherson (DA) said that he needed some clarity because he was confused as to how the subcommittee was taking forward the Remote Gambling Bill if it was in fact not in the subcommittee’s programme of action.

The Chairperson said that the Committee had not received the policy, the policy had been delayed and she had communicated with the Minister on the matter to request that the policy be expedited to the Committee. Recently the Chairperson had received the policy and said that the Committee could now do what it had committed to do at the beginning of its term, which was to have their actions informed by policy. The Committee had then taken a decision that given the shortness of the legislative year, that it would tackle the Remote Gambling Bill within the main Committee. That was why she wanted an update from the subcommittee. She had now received the policy. She reminded members that they were the first committee within the Portfolio Committee on Trade and Industry to deal with Private Members’ Bills. The Committee continued to value the process because it respects the constitutional powers of parliamentarians and legislators. The Committee would deal with a Bill in such a process and would therefore see it brought back into the main Committee in the schedule for the next day’s meeting so that the Committee can deal with it effectively after their return in April.

Mr Hill-Lewis wanted to state for the record that he agreed and that it was at his request that the Committee had brought the Bill back into the main Committee. The agreement was not as the Chairperson had outlined now. The agreement was that the subcommittee would deal with the policy and the Bill. However, the subcommittee did not intend to deal with the Bill, but merely the policy. He was not prepared to have the Bill languish in the subcommittee for at least another year, and that was why he had asked to have it brought back to the main Committee as the Bill needed to be dealt with, and not just the policy.

The Chairperson said that the issue was that the subcommittee was not being attended by members on a regular basis. She asked Mr Mkongi how many times the subcommittee had sat so far this year and how many times there had been a full team for these meetings.

Mr Mkongi replied that he did not have that information at his fingertips, but he thought…

He was interrupted by the Chairperson who replied that it was only twice.

Mr Mkongi said that this was because many members had not been able to attend the subcommittee, although they had sent through their apologies.

The Chairperson reiterated that the subcommittee had only met twice and she said that it would therefore have been irresponsible for her as Chair to simply leave matters as they were, and that was why the Bill had been brought back in to the main Committee, where it will be dealt with effectively.

National Credit Regulator (NCR) input on debt forgiveness
Mr N Koornhof (ANC) said that the Committee had been discussing the affordability of collecting debt; debt forgiveness; the joint responsibility of credit providers  for reckless lending and the NCR’s registration fees.

The Chairperson asked what measures the NCR could share with the Committee that it could develop to deal with these issues.

Ms Nomsa Motshegare, NCR CEO, spoke about the indebtedness of consumers, and specifically over-indebtedness, and noted that the Committee had made mention of debt forgiveness. She said that out of the 23.5 million South Africans with active credit, currently about 10 million of these consumers are indebted. The main priority of the NCR therefore is to consider how it can ease the burden of debt on consumers, especially those consumers trying to repay their loans and struggling with this. There were various measures that were currently in operation to ease this burden, measures such as debt counselling. On debt forgiveness, there are countries that have done this, for example, America had instituted the Obama student loan debt forgiveness programme. Other countries had instituted debt forgiveness programmes for particular groups of people, such as those in the low income category, and government employees, such as teachers, but the NCR would obviously need to do research to understand how those initiatives were introduced in other countries, whether they had been effective, and if they were not effective, the reasons for this. She said that it was important for the NCR to think of how to ease the burden on consumers because the NCR and Committee members all understand that other than this, there are other costs that are currently burdening consumers, such as the upcoming increase in the price of electricity and increased food prices due to the drought. There are therefore many consumers struggling even though they are trying their utmost best to repay their loans.

The Chairperson thanked the NCR for this information and asked Members if they wanted to comment on or interrogate anything that the NCR had said.

Mr A Williams (ANC) said that given the massive indebtedness of what is said to be 10 million people, that there is definitely a need for some kind of study to see how the Committee can assist these people. He proposed that a study on how to deal with debt forgiveness and what other countries had done in this regard should be conducted so that the challenges could be understood before such a programme was launched. However, a time limit needed to be put on that study as it could not continue for the next five years.

The Chairperson said that sounded like a reasonable proposal.

Mr Mkongi agreed with the proposal, but thought that the study should also indicate who should be given amnesty, which group of people in terms of demographics.

The Chairperson asked when she could ask the NCR to report back to the Committee on the results of the study. This year is a difficult year in terms of the Committee’s work load as there are certain items that the Committee has to deal with this year, like the Remote Gambling Bill, and she therefore wanted to set a date early with the NCR to report back on the study. She asked the NCR if they would be ready to report back to the Committee on 15 April 2016 or if that date was too early.

Ms Motshegare replied the NCR would need just a short period to conduct secondary research, and said three weeks’ maximum would be needed.

The Chairperson replied that this was acceptable. The NCR would report to the Committee on the results of the study in three weeks’ time.

Mr Macpherson said that he was wondering what members wanted to do with the end results of the study, he thought that it was important to establish that before the study was conducted because he thought that members could guess what the results of that study would be. Establishing what the Committee wanted to do with the results would also inform the CEO as to what needed to be included in the study and what kind of information the study should obtain.

Mr Williams noted that 10 million people are over-indebted in SA, and as a Committee, the Members needed to start thinking of how to assist them. The government would probably have to attempt to start a debt forgiveness programme to deal with this effectively. However, it could not just forgive all debt, because the country obviously could not afford that. In addition to this, some people are wealthy and had been irresponsible with their money and they should not be given debt forgiveness. Debt forgiveness therefore needed to be granted to certain groups within the poor in South Africa. One of his personal concerns is that the government forgives debt and then a few years later the same people are in debt again because of reckless lending. The lenders must also therefore be looked at to see what role they have played in putting 10 million people in South Africa into a bad situation.

The Chairperson said that the situation in the credit lending sector at the moment is that credit lenders have to apply affordability criteria before extending credit. Credit providers are now forced to apply these criteria and she thought that this is a major step in the right direction in reducing consumer over-indebtedness, which was not a criterion before, or at least it was not spelled out as clearly as it is now. She emphasized that this is very important.

The other issue is that of amnesties or moratoria on the information of bad debt and poor credit performance for consumers. When this had happened in the past, many South Africans had complained that it had limited their prospects of obtaining employment. But there had been no write off of debt per se. There are a number of countries, both developed and developing countries that have pursued a debt forgiveness strategy and secondary research would be quite constructive for the NCR to share with the Committee, and she would certainly welcome that. Credit is closely linked to some of the challenges faced by those in the low income group and arising out of a major wage gap. It was this that the Committee had to keep in mind when considering programmes such as debt forgiveness, as it was this aspect that provides the impetus for these programmes, rather than encouraging irresponsible behaviour in consumers. Programmes needed to be implemented for these reasons, because the burden of debt on low income groups was not always directly of their own making. The Committee needed to adopt a balanced approach to the matter. She was very concerned that consumer debt had come up again during the current economic environment and the Committee could not ignore the reality of the situation, it had to consider it.

Mr Koornhof emphasized that reckless lenders must be part of this research, because they are the ones harming consumers.

National Credit Regulator 3rd Quarter 2015 Performance & Annual Performance Plan 2016/17
The NCR team included the Chief Executive Officer, Ms Nomsa Matshegare; the COO, Mr Obed Toangane; and the CFO, Ms Ayanda Mafuleka.

Ms Motshegare spoke about the NCR’s programmes; the state of the credit market; Consumer education;
Investigations; Enforcement; the three year annual performance plan and budget for 2015-2018; and its third quarter performance.

The legislative mandate of the NCR is to promote a fair and non-discriminatory marketplace for access to consumer credit:
- To provide for general regulation of consumer credit and improved standards of consumer information.
- To prohibit certain unfair credit and credit marketing practices.
- To promote responsible credit granting and use to prohibit reckless credit granting.
- To provide for debt re-organisation in cases of over-indebtedness.
- To regulate credit information and
- To promote a consistent enforcement framework relating to consumer credit.
 
On the state of the credit market, the total gross debtors book to date is R1.63 trillion. The total rand value of new credit granted was R123.93 billion, with mortgages comprising R39.39 billion, or 31.78%. Unsecured credit increased by 13.28% from R18.23 billion for the quarter ended September 2014 to R20.66 billion for the quarter ended September 2015. The total Payment Distribution Agents’ (PDA) distributions to credit providers from April 2015 to February 2016 was R6.1 billion. These payment distribution agents are companies that have been set up to distribute money paid by consumers under debt review, and this gets distributed to credit providers. These PDAs are now going to be regulated by the NCR.

In terms of stakeholder management, the NCR have set up what it refers to as Credit Industry Forums (CIF). These forums have been in existence for nearly two years and are chaired by the NCR. Various stakeholders are represented at these forums, such as the Banking Association of South Africa; debt counsellors associations, and consumers. These forums look at how to come up with solutions to some of the challenges facing the sector and at ways for regulators to work together, in the same way that the NCR and the National Consumer Tribunal do. The NCR also engages with other local regulators such as the South African Reserve Bank on a regular basis as well as delegations from other African countries.

During imbizos in the provinces, consumers are taught that they must not leave their ID book and bank card with credit providers. This message has been repeated time and time again to consumers. The NCR had also retrieved South African social security cards that were seized from credit providers and several credit providers were arrested in raids done in the Western Cape.

Programme 2 aims to protect consumers from abuse and unfair practices on the consumer credit market and address over-indebtedness. To do this the NCR looked at ensuring decreased levels of reckless lending practices by conducting investigations into reckless lending, and also implemented awareness campaigns on misleading advertisements. The NCR is going to continue to intensify its efforts in that area.

Programme 3 aims to enhance the quality and accuracy of credit bureau information and this is achieved by examining these credit bureaus on an annual basis and conducting credit bureau investigations with the 14 credit bureaux that are registered with the NCR.

Programme 4 aims to improve the NCR’s operational effectiveness. This involved improving service delivery through improving automated processes and having an ICT uptime of 96%. NCR knows that it can exceed this percentage as it has done so in the past. It had also developed a service delivery improvement plan.

Programme 5 aims to ensure effective implementation of the National Credit Amendment Act (NCAA). This involves conducting workshops with relevant stakeholders so that there is a general understanding of what the requirements are; multimedia awareness campaigns, (TV and radio and newsprint); outreach programmes (imbizos, mall activations and road shows); and special investigations (raids; prescribed debt; garnishee orders; unregistered new entrants).

Enforcement included:
- 44 referrals to the National Consumer Tribunal (NCT) including cases of garnishee orders;
- R67 million refunded to consumers in overcharged insurance products;
- Fines to the amount of R4.4 million imposed on nine credit providers and;
- ID books, South African Social Security Agency (SASSA) cards and bank cards seized. Several credit providers were arrested in the Western Cape.

The NCR Chief Financial Officer, Ms Ayanda Mafuleka, took the Committee through the budget. The NCR had not budgeted for the additional funding from the DTI of about R8.8 million. The difference in income is as a result of the fact that in the new financial year the NCR will be pushing to get more credit providers registered with the NCR and as such will be getting fees from them. The NCR has also revised registration fees for the new financial year. The NCR has budgeted for R121 million for total operational expenditure and R5.9 million for total capital expenditure. The increase in the cost of fixed assets is as a result of the new ICT operational system that the NCR is busy implementing and developing in phases.

Ms Motshegare said that the NCR would have to review its targets by the end of 2016. She spoke to the 3rd Quarter 2015/16 performance.
- Strategic Objective 1 output was to improve compliance with affordability assessment regulations.
- Strategic Objective 2 output was to conduct reckless lending investigations and take appropriate action where necessary. The NCR was required to investigate 15 credit providers and had exceeded that target by investigating 20 credit providers on reckless lending.
- Strategic Objective 3 output was to increase compliance by credit bureaus in respect of consumer credit information. The annual target here was for two credit bureaus to be investigated and for appropriate enforcement action to be taken where necessary. Investigation into two credit bureaus was completed in the third quarter. Regarding credit bureau compliance with the National Credit Amendment Act (NCAA), two of those credit bureaus were referred to the investigations department and the other 11 did not have any reports of non-compliance.
- Strategic Objective 4 output was to improve the NCR’s operational effectiveness. To do this the NCR aimed to have an ICT uptime of 96%. NCR was able to exceed that target as a new system is being used that enables the ICT to predict network failures and predict the downtimes.
- Strategic Objective 5 output was to ensure effective implementation of the NCAA. As a performance measure the NCR had needed to conduct workshops with relevant stakeholders and a number of multimedia awareness campaigns. That was what the NCR had been able to achieve in the third quarter of this financial year. The Chief Financial Officer presented the third quarter expenditure (see document).

Discussion
Mr Macpherson wanted to get an update on the NCR’s investigations, specifically the ones that it has concluded, and what the outcomes of those investigations were. The NCR had reported that these investigations have taken place but it has not provided an outcome on these investigations, and it is important for the Committee to know what the outcomes of these investigations were. One example of this was the R699pm car scandal. There seemed to be an uproar and there seemed to be action by the NCR, but the Committee was never kept abreast of what the final outcomes of this case or similar cases were. He referred to what Mr Hill-Lewis had said in the Committee’s last meeting that the Committee needed a big case, a big example, to show that the NCR is following through with action in terms of the NCAA.

He wanted to know whether the NCR felt that the targets that it had set itself were appropriate, or whether it felt that they should be increased, because it was very easy to visit only two provinces in a quarter and the NCR should therefore perhaps be setting higher targets.

In terms of the budget, he wanted to know why there was an increase of nearly R10 billion and the reason for the big increases in the personnel cost.

His last question was why fees for registrants, listed under the financial performance for the third quarter, is down by 35%. Was there any specific reason for that big variation in fees?

Mr A Alberts (FF+) noted that on page eight of the NCR’s report it had stated that unsecured credit had increased by 13.28%. He asked the NCR if they could explain what the reason was for this growth in unsecured credit. He suspected that it is because people are not able to live on their salaries alone and because the general situation in the economy is not looking good at the moment.

He asked if the NCR conducted spot checks on banks, to check whether they are actually charging correct interest rates and charges. There had been complaints about some banks, such as FNB’s vehicle branch Wesbank. There is a lot of focus on the smaller lenders but the bigger lenders also need to be checked and the NCR needed to drop by unannounced, without any forewarning, to check what is going on at banks.

On page 11, the NCR mentioned obtaining judgements in an incorrect, distant jurisdiction as one of the matters that it conducted investigations on. He wanted to know how big that problem actually is.

Mr Mkongi wanted to know if the investigations were based on complaints from consumers or if the NCR initiates its own investigations.

He said that last year the NCR had reported to the Committee that it was organizing and conducting workshops to teach people to avoid becoming over-indebted or to deal with over-indebtedness. However people were still becoming over-indebted and he wanted to know why. He asked if the workshops were not having the desired impact in discouraging people from taking credit that they could not afford to pay back.

In 2014 the Committee had dealt with the question of removal of credit information. He wanted to know what the impact of removing credit information because of over-indebtedness would be. What might be possible failures of this programme? He thought that one possible unintended consequence was that it might actually lead people to borrow more money and in that way might be encouraging the exact thing that they were trying to prevent.

Mr Hill-Lewis noted that in late 2014, there was a commitment by the NCR that they would conduct a fraud and criminal investigation into the conduct of the executives of African Bank, and in late 2014 the Committee was assured that that investigation would take five months to conclude. It is now early 2016 and the Committee still has not seen the results of that investigation. From an outsider’s point of view there is a lot of prima facie evidence of criminal and fraudulent activity in their management of African Bank.

He then asked about the ‘viperous’ conduct and activities of the executives of the Lewis Group which had been revealed in the last few months. In some cases the executives themselves had admitted that their conduct had been criminal and in contravention of the NCAA. He thought that it is not good enough for them to refund R67 million when they probably made much, much more than that off what were essentially scams that they were running. He asked where the criminal charges for these executives are or what actions the NCR was taking to hold these people accountable.

Mr M Kalako (ANC) thanked Ms Motshegare for the presentation. He wanted to know what issues are being discussed at the credit forums and how many meetings of these forums had been convened in the last financial year. He asked if there were any questions raised by the trade unions in these forums. He asked how many credit bureaus there are in the country.

He was concerned about the repossession of assets, especially cars and houses. In some cases people’s houses were repossessed and they ended up having to sleep in their cars, until eventually those too were repossessed. He asked if the NCR came across such cases. The banks repossessed those houses and cars and sold them for a profit while the owner still had to continue paying off those debts.

He noted that the NCR had said that it visits mostly rural areas when conducting imbizos and had covered rural areas in about five provinces. He asked when they intended visiting the Eastern and Northern Cape which are vastly rural.

He asked if the tendency of credit lenders of taking bank cards, SASSA cards or IDs of clients is legal. If it is not legal, he asked what the NCR did when it came across this practice.

Mr Koornhof said that the NCR had stated that it had conducted workshops. He asked where these workshops are conducted, how well they are attended and who the NCR invited to the workshops.

He also asked whether charges had been laid against credit providers that did not comply with the NCAA, what these charges were and whether the credit providers’ licences had been revoked.

Ms P Mantashe (ANC) asked about the banks that were identified as charging extra fees or overcharging on interest. She asked how those extra fees benefit the clients of banks and what that extra money is spent on by the banks.

The Chairperson asked about the charges that debt collectors charged. The NCR team had made it very clear that this mandate resided with the Department of Justice. The Chairperson had understood from the Committee’s last engagement with the NCR that it continues to work with Justice. She asked where the NCR is on this matter. Given that the matter goes back several years she asked if the NCR is any closer to resolving this matter with Justice and determining how to deal with it.

Ms Motshegare replied to the question on scams, saying the R699pm motor vehicle scam was referred to the National Consumer Tribunal but the NCR had yet to receive an outcome on that matter.

On the seemingly low targets that the NCR set, she said that the NCR had reviewed the targets for this financial year, and as she had indicated in the presentation, it had increased its targets in the new annual performance plan. She explained that when the NCR visited a province it would cover a number of towns or villages in that province. The NCR had also increased the number of investigations that it was conducting in this financial year.

There are currently 14 credit bureaus in the country. The NCR believes that there are other institutions like credit bureaus out there, and it was in the process of investigating about five of those entities that had come to its attention. She asked that the CFO reply about the budget and the fees.

On whether the NCR conducts spot checks of banks to ensure that they are charging the correct interest rates, she said that the NCR does do these spot checks of banks. The NCAA does allow the NCR to ask institutions for any information related to assessing if the institutions’ credit policies are in line with the Act. It therefore gives the NCR discretion to ask institutions for additional information.
 
She said that the NCR is busy collecting information around affordability and what affordability assessment measures have been put in place. The NCR does conduct spot checks. Over and above this it also relies on the complaints that it gets from complainants. In reply to Mr Mkongi’s question on whether investigations are issued from complaints or whether the NCR initiates them, she said that the NCR conducts two types of investigations: proactive and reactive. The proactive investigations would be based on for instance the entity’s returns, based on the reports that are submitted to the NCR from the auditors or accounting officers where they would highlight areas of contravention. Reactive investigations are based on complaints that the NCR receives from complainants or other registered entities.

The NCR was still conducting workshops but had already covered the majority of provinces, if not all. These workshops seek to teach credit providers about the requirements for complying with the NCAA. This was the intention behind conducting the workshops. The NCR thought that it was now time to start sending out their investigators and conducting compliance visits. The compliance visits are there to assist credit providers to comply with the NCAA, however, the NCR emphasized that it takes reckless lending seriously and would recommend an instance of non-compliance to the Tribunal if it thought that it was necessary to do so.

On the impact of the removal of credit information, she explained there was, in 2014, a removal of credit information that happened for a two month period only. The information that was removed during this period was adverse information for consumers. After that period, the NCR started applying the removal of credit information only in instances where the consumer has paid what was owed to the credit provider. However, there are some providers that have continued to extend reckless loans to consumers, and that is evidenced by those investigations that the NCR has conducted. The numbers of credit checks had gradually increased back to the levels prior to the removal of the consumer adverse credit information.

Ms Mafuleka, NCR Chief Financial Officer, replied to the budget related questions. On the drastic increase in the personnel cost from 2016/17 to 2018/19, the increase is in fact 5% per year, which translates to R4 million in the first year and R5 million in the second year. The increases are inflationary increases and salary increases. The increases are also a result of additional positions created in the NCR which had not existed before, that the NCR wanted to fill in the future. The NCR had budgeted for these increases and had been instructed by National Treasury that the increase should be between 3 and 5%. These positions are for core functions and advisors as the NCR is in the process of implementing the various guidelines on the ICT programme and needed to capacitate its ICT department. It was also in the process of recruiting an ICT manager which was a position that had never existed before. This was necessary for the NCR to be able to comply with the government framework.

About 20% of credit providers on the NCR database are retailers and the remaining 80% are microlenders. She said that it is challenging to collect fees from microlenders. To deal with this difficulty the NCR had introduced a registration certificate with an expiry date, which would force the microlenders to pay their annual fees if they wanted a certificate that was up-to-date.

Mr Obed Tongoane, NCR Chief Operating Officer, said that the NCR mandate concerns overseeing the regulation of credit. On the question about the board of African Bank, the NCR has referred the matter to the National Consumer Tribunal. However, African Bank had been placed under curatorship and currently had a curator in place, and legal action cannot be taken against an entity that is placed under curatorship unless one has permission from the courts to do so.

On the concern that the amount charged credit providers who had been found guilty of overcharging was not sufficient. When these matters were referred to the Tribunal, the NCR did not only ask for these consumers to be refunded but for the credit provider to institute other things as well such as ensuring the clearance of these consumers’ names by the credit bureaus.

On Mr Kolako’s, question about who is represented at the credit forums, most of the NCR’s registered credit bureaus and consumers are represented in these forums as all of these stakeholders are confronted with the issues in the sector as they are all affected by the sector’s performance.

On the question on repossessions, the NCR does come across repossessions because it conducts compliance investigations and so forth. It has also prioritised repossessions, especially of vehicles and houses, and has intervened in several cases.

Ms Motshegare said that it was not legal for credit providers to keep their clients ID books or bank cards and this went against the National Credit Amendment Act.

Ms Motshegare replied about the questions on the imbizos, saying that in the next quarter the NCR will be visiting the Eastern Cape and the Northern Cape to conduct those outreach programmes. There are 14 matters that the NCR identified in the Western Cape that it has referred to the National Consumer Tribunal.

On Adv Alberts comment about the increasing amount of unsecured credit at banks, she said that Members must remember that unsecured credit constitutes a low percentage of overall credit, and that while this number was increasing, it started from a low base. However, the NCR had raised a concern with the Committee in 2012/13, saying that unsecured credit was growing at a rate of 45% year on year. However, credit providers seemed to have learnt their lesson about this as consumers found it very difficult to pay back that money. The NCR was still keeping an eye on this situation though as it did not want the sector to end up in the same situation as it was in previously with regard to unsecured credit.

She request that the dti respond about debt collector charges and who the debt collectors report to. She said that the Courts of Laws Act was being amended to deal with that, but she thought that the dti could shed more light on this issue.

Mr Siphamandla Kumkani, dti Director of Credit Law and Policy, told the Committee that the Courts of Laws Amendment Bill had been approved in the last two weeks by Cabinet. This Bill is a product of the Department of Justice which had been working together with the DTI, and emanates from concerns that were raised on various issues. The amendments to the National Credit Act (NCAA) already made some provisions in this regard. Incorporated in the new Courts of Laws Amendment Bill is the proviso that everyone who does debt collection should actually belong to the Council for Debt Collectors and account to the Council. The granting of permanent attachment of assets was of concern to members, but he assured them that this has also been addressed in the NCA Bill. He said that a lot of work had therefore been done with regard to debt collectors, to give effect to some of the amendments that have been made in the Act.

The Chairperson thanked Mr Kumkani and said that his role was invaluable.

Mr Macpherson said that NCR CEO’s answer about not getting outcomes from the National Consumer Tribunal (NCT) is deeply disturbing. After NCR investigation had been concluded, it was then referred to the NCT, and after that there seemed to simply be no outcome from that process. He did not blame the NCR as he recognised that there are other bodies that are not doing the job they should be doing, and in fact are not actually protecting consumers. What he therefore wanted the Committee to receive is a detailed list of all the investigations completed and the outcomes of those investigations and whether they were referred to the Tribunal and if they were referred, what date they were referred and when the Tribunal received them.

The Chairperson asked Mr Macpherson if he was referring to the R699pm car scam.

Mr Macpherson replied that the problem was bigger than the individual case of the R699pm car scam. He said that there is a general problem with investigations that are completed by the NCR and then there are no follow ups or action from the bodies that are tasked to do so.

The Chairperson noted for the record that the issue that Mr Macpherson was referring to was from a previous year’s document and not from the current document that the NCR had given to the Committee. She said that it was important to establish this for the record, not just the case number but the details of the case as well. She said that it only appeared that this issue was no longer on the radar screen.

Adv Alberts asked the Chairperson to ask the National Consumer Tribunal to report to the Committee on matters placed before them, as there are matters that have been placed before them that they have not attended to properly. He said that they had changed their procedures, without informing any of the other agencies that work with them, such as the commissions that work with them, and when these entities lodged complaints, they were told that they had not followed the correct procedure for lodging a complaint. However the procedures that the NCT now followed seemed to be in reverse order to the formal civil procedure rules and the new procedure rules therefore do not make any sense from a legal perspective.

The Chairperson agreed that this is a matter that the Committee must take forward.

Mr Hill-Lewis said that South Africa had to be careful not to create the impression that there are never any consequences for those that do not obey the law. However, this was difficult to avoid when three years after the investigation into African Bank there had been no repercussions for the executive team, who had resigned long ago and were currently ‘living it up’ and selling their houses for millions, houses that had been built with the proceeds of the illegal banking practices of African Bank. These executives must be held personally accountable for their actions. The same is true of the Lewis Group and for some of the other cases that had been brought before the Tribunal. He wanted the Tribunal to come to the Committee and explain why these cases were taking so long to be resolved. The African Bank case was not even underway yet, it had not even been heard of yet. He emphasized that this was not good enough and it reinforces the impression that there are no consequences for breaking laws. He proposed that the Committee write to the NCT and ask them to come and brief the Committee on what progress they were making on such cases and on the criminal prosecution of such people.

The Chairperson said that the Committee needed to also unpack the Companies Act with respect to the conduct of directors, as a lot of what Mr Hill-Lewis was referring to pertained to the conduct of directors.

Mr Mkongi said that the Committee needed to see the arrest of people who were contravening the NCAA, such as retailers who were taking people’s IDs when extending credit to them. He noted that the NCR had said that it had reported these instances of IDs being kept to SAPS, but he asked what the conviction rate is for these people. Old women in the townships who needed credit were having their bank cards and their SASSA cards taken away. He wanted to see the conviction rate for these crimes. The NCR had stated that the total new credit granted was R123.93 billion. He asked who these consumers were in terms of demographics.

The Chairperson said that the issues that had been raised were all corporate issues and that it was important for the Committee to bring those issues to the meeting the following day, so that the issues can be captured and the documents can be drafted, indicating what the Committee requires from various entities, as many of the issues that Members had raised required engagements with various entities. She said that these issues are important and that the Committee would not just let them slide. The Committee had asked the NCR for a briefing on the outcomes of the study. The NCR would receive an official letter from the Committee requesting this, as well as any questions unanswered in the meeting. The Committee would identify a slot for the NCR to present to the Committee on 15 April 2016.

She said that what was also noticeable in the NCR’s report is the number of debtors. A matter that had been raised several times was state pensions and grants being utilized as collateral to get loans. The sector is not making too much headway in this. National Treasury has already been looking at the amendment of provident funds as some people were losing their provident funds and no longer had them when they needed them, especially if credit providers were exploiting the system this way.

The Chairperson said that in tomorrow’s meeting, the Committee would process the written answers to the questions that had been asked in the meeting that the NCA had not had a chance to respond to, to ensure that no matters were overlooked.  

Mr Hill-Lewis requested the same of the NCT, but that it should come from the Committee, not from the National Credit Regulator.

The Chairperson said that she needed to clarify what the protocol is for the Committee in making that request and she was therefore going to consult the procedural desk regarding Mr Hill-Lewis’ request. The substance of his request is important, it was just the manner in which the request needed to be submitted that she was not sure of.

Mr Macpherson said that he felt assured that the Committee would receive this list.

The Chairperson thanked Ms Motshegare and her team from the National Credit Regulator. She reminded everyone that during an oversight visit Ms Motshegare had said that there was so much to be done and so many issues to iron out and that the Committee needed to work more closely with the NCR on these.

The Committee was supposed to have a formal consideration of the KZN oversight report but this would be considered at the meeting the next day.

The Chairperson noted that the Committee would not consider the Committee Report on the International Astronautical Congress Report as one of the two committee members who attended, was not present. In previous years it was never only the Portfolio Committee for Trade and Industry that went to conferences, in many instances the Portfolio Committee on Science and Technology had also attended and often delegations from at least two other committees would also attend and these committees would be identified based on what the theme of the conference was.

The meeting was adjourned.

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