Debt Relief Committee Bill: public hearings Day 1

Meeting report

Opening Remarks
The Chairperson welcomed representatives from the Department of Trade and Industry, National Credit Regulator, National Credit Tribunal, National Treasury and the different stakeholders.  She noted that the Committee was given an award by the South African Farmers Development Association and the South African Sugarcane Association to recognise the oversight work of the Committee which changed the apartheid legislation of 1978. The new legislation will bring the industry in line with constitutional requirements. The Committee will inform the Speaker of the Award and Members from different political parties had attended the award ceremony

Mr A Williams (ANC) raised the water crisis in Cape Town. He proposed that the Committee should intervene to ensure that water prices do not go higher than in other cities because some businesses would use the opportunity to sell water at an unreasonable price. The price of water should be the same.

The Chairperson thanked Mr Williams for raising this.

Mr Williams reiterated that the water issue was escalating and that the Committee should engage with the Executive to freeze water prices. If the issue was not attended to quickly, poor people will not afford to buy bottled water. One should not allow opportunistic entrepreneurs.

The Chairperson asked him to clarify if he was referring to a penalty for water charges or the regular price for bottled water. The Committee was concerned about the crisis, but the concern as stated by Mr Williams was only a proposal to the Committee to investigate. She asked if someone could clarify about the regular prices. She asked other Committee members if they supported the proposal

Mr G Cachalia (DA) replied that in principle he supported the proposal, however he was concerned about the use of the word ‘intervention.’ He preferred that another word be used instead of ‘intervention’.

The Chairperson stated that the Committee was satisfied with the use of the word intervention unless he suggested another word. She asked members to flag the matter and consider it later.

Debt Counsellors Association of South Africa submission
Mr Paul Slot, Debt Counsellors Association of South Africa (DCASA) president, noted that just under 10 million South African consumers have impaired credit records. A lot of consumers are failing to make their debt payments on time. About 50 percent of consumers pay their arrears, and some get into more debt to pay their old debts. DCASA supported the debt intervention for low income earners but the association was of the view that the Debt Relief Bill will be unlikely achieve the intended relief for low income earners. The process of debt intervention as outlined in the Bill was too complex, too ambitious, longwinded, undefined. The Bill ignored the existing magistrates’ court process of debt review. DCASA was of the view that this should be incorporated in the Bill. The role of the National Credit Regulator to assist in applications and repayments seems to be overlooked by the Bill. The role and power assigned to National Credit Tribunal members to decide without firm rules or yardstick based on the untested information, without hearing submissions or arguments from the credit providers or consumers, was considered unbalanced. This could compromise the rights of consumers and credit providers.

The requirements for consumers to apply for debt review are not practical for the following reasons;
• The consumers are scattered around South Africa. Some stay in the rural areas.
• Most of the consumers do not have the transport to go and apply for debt review in person.
• Experience had shown that even if consumers apply telephonically, internet or via fax, it was still a difficult process.
• The Bill required applicants to apply and submit six months’ payslips and from experience it had been a challenge and would make it difficult to apply for the intervention
• The inclusion of realisable assets was unpractical since it would be difficult to distinguish assets that are not tools of trade and valuation thereof. This opens the door for consumers to appraise their assets for less than they are worth. Since the Bill targets low income earners, the majority of them do not have the assets stipulated in the Bill, and therefore it is unnecessary to include it in the Bill.
• It was impossible to have a debt review on an annual basis.

DCASA supported the initiative to report reckless credit, but did not support the proposed criminalisation of not reporting this. Criminalisation might result in debt counsellors leaving the industry. To improve the reporting of reckless credit, DCASA proposed the following:
• More defined timeframes for reckless credit assessment
• Debt counsellors who will conduct the reckless credit assessment to be protected from cost orders from credit providers
• Extending protection to consumers when the reckless credit is reported to the National Credit Regulator.

DCASA submitted that section 88F which gives the Minister Powers to intervene with debt intervention measures, may result in debt starvation to consumers in vulnerable industries. The powers given to the Minister may create risks and legal uncertainty which is not good for any legislation. Therefore, DCASA recommended the following for the Committee to consider:
• Use the current Debt Review process as a base for Debt Intervention applications
• Use the skills and systems of Debt Counsellors to receive and assess applications and to formulate a recommendation based on the affordability of the consumer
• Simplify and define the process, time frames and restructuring rules
• Payment for service to debt counsellor through a defined percentage of repayment.

Discussion
Mr Cachalia asked about the various costs of debt counselling that impacted the applicant when seeking debt counselling.

Ms P Mantashe (ANC) stated that her understanding was that debt counsellors were paid by the consumers they served. She asked that DCASA clarify its recommendation on payment of debt counsellors for their services.

Ms C Theko (ANC) asked DCASA to elaborate on the legal implications of section 88F with regards to the Minister’s powers to grant debt intervention measures in extraordinary circumstances.

Ms S Van Schalkwyk (ANC) asked DCSA to give an alternative penalty for not reporting reckless lending if it was of the view that criminalisation was inappropriate.

Mr Paul Slot replied that in terms of the current debt counselling process, debt counsellors received a professional fee which was equivalent to the monthly instalment of the debt. However, the professional fees were last reviewed in 2010. There was also an application fee of R50 which is paid by the consumer as prescribed by the National Credit Act. There was also an aftercare fee which is equal to 5% of the monthly instalment for the first two years and would be reduced to 3% after two years. If the Bill clearly sets out defined rules and fees applicable, it would be easier to achieve its objectives. For the debt review process to work well, it needed to have clearly set rules that are simple and have defined outcomes.

In response to the question on the Minister’s powers, he stated that there was a likelihood that if the Minister identified a certain industry as eligible to receive debt intervention, the credit providers might stop lending money to people in that specific industry. Consumers working in that area would suffer debt starvation or not access credit. Reckless lending was well defined in the Act. However, the assessment process was not clear. DCASA proposed that such an assessment process needed to be clearly outlined.

Mr Williams asked whether DCASA was speaking on behalf of credit providers, when he mentioned that the powers given to the Minister may prevent consumers in a certain sector accessing credit. If not, from where do he get that information?

Ms S Van Schalkwyk said her question on reckless lending had not been answered. She asked what the preferred sanction would be for not reporting reckless credit instead of criminalisation as in the Bill. If they were not supporting it, what should happen then?

The Chairperson asked if currently a person earning R 7 500 per month could have recourse to debt counselling. DCASA had stated that it was unrealistic to conduct annual reviews. She asked if 10 years would be realistic for DCASA. The sub-committee had worked with the judiciary and it was brought to the attention of the Department of Justice that it had not reviewed the amount for tools of trade as outlined in the Magistrates’ Court Act for almost 30 years. The Department had thanked the Committee for that since it had been many years. She did not understand taking debt intervention to magistrates’ courts and needed clarity.

Mr Slot replied to Mr Williams that he had not made his comment on behalf of credit providers. However, experience showed that credit providers conduct a risk assessment before lending money. If they believe that a certain industry was under threat, they will stop lending money to consumers in that sector. Therefore, the comment was made because DCASA was concerned about the consumers in vulnerable sectors.

He replied to Ms Van Schalkwyk stating that criminalisation would have the opposite effect of the Bill. The process of reporting reckless lending only needed to be clearly defined and accessible. The provisions of the Act did not need any amendment in this regard. What needed to be done was to work on the process of assessing and reporting reckless credit. DCASA had set up a Task Team with the National Credit Regulator (NCR) and defined the rules of debt review in 2007 which was one of the reasons why it was successful. DCASA suggested that if the reckless credit reporting system is incentivised, it would be easier to achieve the goals of the Bill. That was the alternative that the DCSA was offering.

He replied to the Chairperson that currently, consumers earning less than R7 500 also apply for debt counselling. Consumers with debts worth R 50 000 or less currently apply for debt administration. On the annual reviews, the consumers under debt review must contact debt counsellors usually after every month so that the debt counsellor will know what they are doing and if their income has changed. The experience of DCASA was that low income earners find it difficult to provide their annual income or financial statements. This made the process more difficult. DCASA was concerned by the fact that it was difficult to get hold of the consumers and the required documents, so it might be cumbersome to have annual reviews. On the question of tools of trade, it might be difficult or consumers to produce valuation of their tools of trade when they do not have the assets to declare. It might be difficult to ascertain whether the valuations are credible and reliable. Therefore, it was unnecessary to have such a requirement in the Bill.

DCASA was of the view that the magistrates’ courts could be used since they already had clearly defined processes.

The Chairperson mentioned that the process of valuation of assets had been used in the past and it was not something new. She thanked DCASA for its submission.  

Association of Debt Recovery Agents (ADRA) submission
Mr Marius Jonker, ADRA Chief Executive Officer, stated that a lot of households in South Africa were in debt and this results in socio-economic deprivation. This had to be addressed urgently. In addressing this, it was important to uphold constitutional democracy. ADRA was concerned about the following questions:
• Does the Debt Relief Bill promote the rights entrenched in the constitution?
• Will the debt intervention process in the Bill address the cause of over indebtedness in South Africa?

To answer the first question, the ADRA was concerned about the impact of the legislative process followed on the outcome of the Bill and the substantive issues as contained in the Bill. The ADRA also thought that there was no proper scientific research done before the Bill was tabled. The timeframe that ADRA was given to provide comments was short and unreasonable, and it hoped that it will be invited to participate in the research process so that the Bill has a solid scientific foundation. In case of Land Access movement of South Africa v Chairperson of National Council of Provinces and others, the Constitutional Court declared a legislation invalid because of the short timeline given to interested parties to respond. The ADRA proposed that a proper research must be done, and all legislative processes followed to avoid the Bill being declared unconstitutional. The ADRA submitted that the Act provides for remedies for rendering reckless lending unenforceable. Debt intervention does not deal with reckless credit but deals with credit that was granted lawfully. The foundation was not reckless credit but lawful credit. Section 25 of the Constitution Section 25 (1) of the Constitution provides that no one may be deprived of property except in terms of a law of general application, and no law may permit arbitrary deprivation of property”. According to ADRA this constitutional provision raises four questions:
• Does debt constitute debt as contemplated in section 25 of the Constitution?
• Does debt review constitute deprivation of property?
• If so, is the deprivation arbitrary?
• What are the exceptions in which section 36 of the Constitution would apply?

In the case of National Credit Regulator v Opperman, the Constitutional Court dealt with section 89(5) of the Act and found that a debt was property as contemplated in section 25 of the Constitution. It found that interference to have a legally relevant impact on the rights of the affected party that amounted to deprivation. The other question is whether the procedure providing for debt intervention is arbitrary or not. ADRA submitted that the procedure was arbitrary and unfair because of the following provisions in the Bill:
• Section 88 B(4): The NCR may only consider information the consumer must provide [Sec 88(A)(4)] and information requested at the sole discretion of the NCR from the credit provider [Sec 88(A)(4)].
• Section 88C(1) The Tribunal may consider a debt intervention application “with reference to the documents included in the referral from the National Credit Regulator only, without further evidence being led.”

The credit provider’s participation in the debt intervention was very limited in that, it will only participate when requested by the NCR to provider certain information. This provision does not respect the audi alteram partem rule, since the credit provider and any interested party had no right to participate in the process.

In the case of Tshwane City, the Constitutional Court outlined guidelines to test arbitrary deprivation. The debt intervention did not comply with those considerations. For instance, the Bill ignores and disregards the rights of the credit provider in respect of repayment, the beneficiary faces no adverse consequences and even retains assets obtained with unsecured credit, the threshold of R7500 is unjustified, the sanctity of contract and the rule of law is ignored. As such the Bill could have the effect of directing access to credit away from consumers who qualify or potentially qualify for future interventions.

ADRA was concerned that some provisions of the Bill were vague and the effect of that would be failure to implement, since vagueness results in many interpretations. For instance, section 88A(b) of the Bill provided that “realisable assets” was central to the determination on whether a consumer qualifies for debt intervention. However, it did not define realisable assets. Section 88C(4) stipulating that the financial circumstances of the debt intervention applicant did not sufficiently improve was central to the Tribunal declaring a debt extinguished. However, it was not clear what sufficient improvement entails and how that provision must be interpreted. Section 88F states the Minister may prescribe future debt intervention measures for indigent people. However, the Bill did not clearly state what constitutes indigence or the criterion to determine such status.

In criminalising a transgression as in section 126B of the Bill, it was important to refer to section 9 of the Constitution which provides for equality. Criminalisation as contemplated in the Bill, meant that the credit provider was compelled to consider the consequences of pursuing the debt or consequences of potential prosecution. This situation will expose all directors of credit providers to criminal prosecution or potential imprisonment. This is not the intended aim of the Bill. ADRA submitted that this was unfair. The criminalisation should be removed because it would not advance the objectives of the Bill nor the Act.

The Bill introduced some unintended consequences in that credit providers could pursue debts in courts or stop lending to consumers. Thus, consumers will not afford to acquire credit. The enforcement process was also costly. South Africa lacked financial education to alleviate household debt and it was important to introduce a subject in school to encourage financial literacy.

Discussion
The Chairperson thanked Mr Marius Jonker for his well-researched submission

Mr Cachalia appreciated the submission. He asked if Mr Jonker supported the intention of the Bill considering the remarks he had made. ADRA’s submissions were too broad since they touched on constitutional provisions and this could derail the progress of the Bill. He asked if Mr Jonker was prepared to work with the Committee to ensure that the specific target groups benefit from the Bill,

Ms Theko stated that she was worried about legal process when Mr Jonker said the Committee had not given ADRA enough time to prepare for its submission. She requested the Committee’s Legal Advisor to advise on the implications of ADRA’s submission that it was not afforded enough time to prepare.

Mr S Mbuyane (ANC) asked who the association represented. The submission was two-sided and he could not understand whose interest ADRA represented. Who do they feel must be protected?

Mr J Esterhuizen (IFP) said he thought that South Africa had enough legislation, but the problem was implementation and oversight. There were gaps in the legislation and consumers in South Africa are driven by anxiety to own big and expensive things. The R7 500 figure used was random and could be changed. It was important not to make the situation difficult for credit providers or banks because the consumers are the ones who will suffer in the end. What is the cost of debt recovery?

The Chairperson said the threshold of R7 500 was not in any way arbitrary. National Treasury would comment on this later. She was surprised that ADRA had said it was not given enough time to prepare the submission. On 26 August 2017, people were invited to make their submission. Banks, members of the public and other entities came for the public hearing. She asked if six weeks was insufficient. Due to the different faiths in the country, there are other important religious holidays which are not Christmas. She strongly believed six weeks was sufficient for all interested stakeholders to conduct their research and comment on the Bill. Information about the Bill was readily available on radio, television and newspapers.

Mr Jonker replied that ADRA was in full support of the Bill. However, the correct question should be whether ADRA supported the assistance to overindebted consumers who are poor. He reiterated that ADRA supported the Bill and its intention to assist economically disadvantaged consumers. ADRA was also prepared to support the Committee and other stakeholders to ensure that the Bill achieves its aims. ADRA was awaiting commitments from other associations to work together. There was a misconception about debt recovery. However, it was not sustainable to recover debt from people who do not have money, or people that are not capable of paying their debts. A lot of resources are used by members of the association to identify consumers who are not capable of paying their debts and if they cannot pay, their debts will be written off without any form of remuneration to the members of ADRA. Debt collection costs are limited in terms of Debt Collection Act which is approximately R900 or the capital amount, whichever is smaller. In a study conducted by ADRA three years ago, the study showed that less than 3% of the industry’s income came from debt recovery. Therefore, the costs were insignificant unless legal action was taken.

He answered Mr Mbuyane’s question stating that ADRA represented the formal debt collection industry which consisted of registered debt collection companies, debt collectors, credit providers, law firms, companies. Its membership constituted 70 percent of the debt collection industry in the country. On the question of whether the country needed more legislation as raised by Mr J Esterhuizen, he stated that ADRA was in support of enforcing the laws that were already in existence like the Act. He agreed with Mr Esterhuizen that there was no need to have more laws but implementation. For instance, there have been several cases of corruption in courts for attachment of emolument orders by law firms, but no clerk has been dismissed or charged. The laws would not serve a purpose if they are not implemented. Section 3 of the Act states that South African consumers should receive financial education, but this had not been implemented ever since the Act came into force.

Concerning the timeline as addressed by the Chairperson, he stated that he had the minutes of all the meetings and deliberations. However, he was of the view that the debt collection industry could not respond based on deliberations since they had to wait for the Draft Bill to be published. His concern was not that the industry closed but the retail shops will be open even during Christmas and consumers continue to receive credit. The Industry also required an actuary to conduct an impact study before ADRA could comment on the Bill. The Bill had an impact on the Constitution and the industry required attorneys to provide legal advice. It was impossible for ADRA to get the appropriate legal advice since during December most lawyers would be on holiday. For those reasons, ADRA maintained that the time that they were given to conduct research and respond when the Bill was published, was not enough.

Mr Esterhuizen stated that there were two sides to the coin in that some people paid their debts and some do not. He emphasized that recently the City of Tshwane written-off debts worth billions. This created precedent. The previously disadvantaged people needed more debt counselling. To give those people debt consolidations loans was also not the best thing to do when trying to assist them. People with bad credit records do not access credit because banks aggressively protect their interests. It was important to look at both sides and not focus on one sector within an industry.

Mr Jonker replied that ADRA had conducted research with National Treasury last year in October and discussed that the Debt Collection industry writes-off debts worth approximately close R 7 billion every year. The debt written-off by the City of Tshwane was a result of the work done by ADRA members who identified consumers who could afford to pay their debts. ADRA participated actively in assisting consumers. On the cost of credit, he was not an expert in that area and could not respond as to why there are different types of interest rates applicable in various credit types.

The Chairperson thanked Mr Jonker, saying that in most cases, Committee are given Bills from the executive but in this instance, it was the Committee itself that had generated that Bill which was then gazetted

Credit Bureau Association (CBA) submission
Ms Alison Magrath, CBA Chief Executive Officer, noted that the Association represented registered approximately 15 registered credit bureaus. The CBA supported the Bill and its intentions although it raised technical issues that need to be addressed. The debt intervention process was very complex from how the current process worked The Bill clearly showed the roles and responsibilities of the consumers in applying for debt intervention, and roles played by the National Credit Regulator, National Credit Tribunal and Credit Bureau. However, it failed to show the responsibilities of the credit provider. It was important to note that when a consumer enter into a credit agreement and the credit provider submits information to the Credit Bureau, CBA cannot alter the information. This was because the information provided on the data transmission hub may only the altered by the credit provider itself. What the Bill proposed was that the credit bureaus should be able to a get an order and alter the information of the consumer on the portal. However, currently it was impossible for the credit bureau to alter such information. Therefore, CBA suggested that when the NCT grants an order, that order should go to the credit provider who have access to the agreement and can make amendments on the agreement.

CBA also raised the following:
• The Bill should provide for all orders pertaining to debt intervention and rehabilitation and all data amendments in respect of the Orders to be reflected on the records of the credit bureaux
• NCR to keep a register: There must be an amendment to S69 of the Act as currently it was inoperative
• NCR required an IT infrastructure and system to enable it to implement the proposed amendments
• NCR to establish a system where debt relief applications and information (persons & orders) are held. NCR and Tribunal to implement an encrypted port NCR to upload recommendations for orders to be made by the Tribunal; Tribunal to upload declarations or orders granted.
• The Bill did not provide for the submission of all the relevant information, in particular the data changes, around the debt intervention process to the credit bureaus: CBA then recommended that the appropriate wording be inserted, but further that an implementation team consisting of the credit bureaux, credit providers, NCR and Tribunal be established to co-ordinate the orders, the information contained in the orders, and the respective data flow from one party to the other. As such, CBA recommended that an industry forum must be set up to assist in looking at the data. It was important that the information on every order granted should be known by CBA.

Discussion
The Chairperson thanked Ms Magrath for her constructive proposals.

Mr Williams stated that all the presenters had shown that they were clearly in support of the intention of the Bill. The only queries raised were on technical implementations. The NCR should take note of all the concerns raised by all the presenters since they were to implement the Bill. He was pleased that all the presenters supported the Bill

Mr Esterhuizen said he agreed with the recommendations of Ms Magrath of having to flag the profile of a consumer while they were undergoing debt intervention. However, he was concerned that Banks could be hesitant to offer loans to people who had paid their debts or after receiving clearance certificates.

Ms Alison Magrath replied emphasising that one of the critical issues was that the NCR did not have the proper IT systems to ensure that it was capable of handling electronic information of the consumers. Therefore, the NCR should update its IT systems. Currently the NCR was able to only handle documents up to 1 megabyte. The NCT should be able to handle electronic information and upload the orders electronically so that the process becomes simple for the information to flow.

Currently, if a consumer was to undergo debt review and they finish their payments, the negative information on the credit bureau would be removed. For instance, a sequestration order must be held for 5 years by the bureaus but will be removed after the period of 5 years expires. However, the repayment process will not be removed, and this was one of the important information that the Bill had to address to ensure certainty. The Bill could have regulations which provide for what would happen after sequestration or rehabilitation or when a consumer has completed the debt intervention processes.

The Chairperson stated that the Committee needed to engage her further. The purpose of rehabilitation as contemplated in the Bill was to discourage reckless borrowing and encourage financial literacy. She thanked her for bringing up important issues in the submission and that the Committee will explore them in detail.

Ms Alison Magrath said CBA was starting a pilot project to educate Grades 11 and 12 starting this year. The focus would be budgeting skills, credit and financial literacy and managing debts.

The Chairperson thanked the CBA for that pilot project

Mr Esterhuizen pointed that the Act stipulates that within 7 days after a person has paid his debts, he/she must be furnished with a clearance certificate. A consumer should not have to wait to apply for bonds for them to get the clearance certified. He agreed with Ms Magrath’s recommendations.

Ms Magrath replied that the Act stipulated that CBA must remove all the adverse information which appears on the consumer’s profile when the consumer has completed his or her payments. The adverse information was only the negative information about the consumer’s profile. However, the historical payment profile would not be removed, and the credit provider could still see that information because CBA is instructed by the Act not to remove it.

Microfinance South Africa (MFSA) submission
Mr Hennie Ferreira, MSSA Chief Executive Officer, indicated that MFSA was happy to engage with the Committee and other stakeholders in ensuring that the Bill achieved its purpose. MFSA was concerned about the needs of consumers to ensure financial inclusion. MFSA represents small businesses in the credit ecosystem to fight poverty. Financial inclusion was one of the MFSA’s objectives. Members of MFSA are small business and many of them are in the rural areas. The Association supports responsible lending practices. The assumption that MFSA and its members were dishonest was inaccurate since they do not take deposit from consumers and there was no single member of MFSA who had been criminally charged. MFSA was of the view that Section 70(1)(a) and 2(aA) needed to clearly outline consumer credit history and the consumer’s repayment profile must be listed to the credit bureau and include the specific reasons and circumstances of each consumer. Section 88A(2), (3) and (4) dealing with the application process needed to specify that debt intervention be subject to an application by the consumer. The application should include key requirements for consumers, applicable criteria and adjudication process.

More so, Section 88A(1)(a) and (c); Section 88A(2) and (3) providing for the category of consumer eligible for debt relief was incomplete. MFSA was of the view that a consumer’s monthly income could not be used as the sole determinant for whether a consumer was eligible for debt relief. It therefore suggested that other factors should be considered, such as: joint income; source of income; work and household expenses; consumer dependents. Similarly, an income threshold could not be the sole determinant or guidance for which consumers should receive debt relief or a category of consumers who are over-indebted. MFSA also pointed out that a mandatory rehabilitation period and programme must be implemented for all consumers who have benefited from a debt intervention measure, irrespective of the type. This must be supplemented with a rehabilitation programme to provide financial literacy and management and budgeting skills to facilitate responsible engagement with the credit ecosystem. There were existing legislation and regulations governing credit life insurance. However, these regulations and their application had not be appropriately evaluated, including the impact on specific types of credit providers.

In terms of section 88C(4) dealing with debt write-off and extinguishment, MFSA submitted that debt write offs should always be a last resort. If debt write off occurs, it would be more difficult for consumers to access credit from microfinanciers, thus potentially driving them into the underground market. He suggested that immediate debt interventions could be implemented by way of a cease in the accumulation of fees and interest, until the consumer is able to make a payment and fulfil debt obligations.

He said that reckless lending was indefensible and the existing legislation must be enforced. Moreover, for consumers to qualify for debt intervention, it was MFSA’s view that they should demonstrate the period of distress and that they have exhausted other available means. However, this must be subject to a sunset clause and strict parameters to ensure that consumers do not abuse this system and claim unemployment for extensive and consistent periods of time. Therefore, changes in the consumer’s employment status and circumstances could be considered, to appropriately adjust conditions of debt interventions.

The power of the Minister to prescribe debt interventions presented a risk and introduces uncertainty and instability in the credit market eco-system. Consumers would directly experience the impact of this by way of financial exclusion and access to financial and credit products. MFSA recommended that the Minister’s ability to prescribe debt interventions should include strict guidelines for applications. This includes parliamentary oversight, consultation and public hearings. He was of the view that prescribed debt interventions must be applicable for a specific period including the provision of a sunset clause.

Section 157A and 161 placed unreasonable and unrealistic requirements on the credit providers, which fell outside of the ambit of existing legislative and regulatory provisions. MFSA noted that these provisions did not specify what constituted an offence. The imposition of penalties (fine and or imprisonment) should be consistent with the offence including considering the nature of the credit agreement and type of credit provider. Since Microfinanciers are small-scale businesses, the 10% of the annual turnover or R1 000 000 penalty would cripple the sustainability of the business and its ability to responsibly provide financial and credit products to those deprived consumers in most need of financial inclusion. Therefore, this might result in unintended consequences.

Discussion
Mr Cachalia acknowledged the importance of microfinance in the economy. He then asked what the quantitative and qualitative impact of the Bill would be on the broader credit market in South Africa. He asked for an overview of the underground market and how the Bill could impact the non-banking credit providers. He suggested that MFSA should also respond in writing. He asked what is the size of the underground market of your membership? How has it grown over the years? What would be the impact of the Bill on the non-banking credit market represented by MFSA?

Ms Mantashe stated that the Committee saw a necessity to alleviate over-indebtedness in poor households and she was pleased by the support and work being done by MFSA. She praised MFSA for understanding why the Committee came up with the Bill. The Committee was not fighting with the financial sector, but the members were appealing to all stakeholders to come and engage with the Committee so that poor South Africans are rescued. To ensure inclusivity, all stakeholders had to work with the Committee.

Ms Van Schalkwyk welcomed the submission. She asked why there was an increase of businesses closing in the underground credit market. Was there a problem of over indebtedness within the group that was served by the association? She asked if MFSA members also offer credit to low income households that are grant recipients.

Ms Theko said that the Committee was concerned about having an inclusive economy and transformation. She asked if the membership of MFSA consisted of the general demographics of South Africa. She stated that the other associations that had presented should also respond so that the Committee knows who was represented by those associations.

The Chairperson said the Bill made it clear that the target group would be people who would have been retrenched. This was one of the big issues that came up before the Sub-Committee drafting the Bill. People could be involved in accidents and other unforeseen circumstances which result in them incurring many debts or losing a lot of money. She was worried about the MFSA submission that consumers who do not have fixed term employment or who are in between jobs should not automatically be eligible for debt intervention. The Bill indicated that no one was automatically eligible since there was a requirement that the consumer demonstrate the period of distress and that they should have exhausted other available means. She asked for an explanation of this. South Africa has a lot of rogue credit providers who are lending money without being registered and the Committee had been told that South Africa was not harsh on people giving credit to consumers without licences. She asked him to explain reckless lending and penalties within the MFSA sector and smaller credit providers.

Mr Hennie Ferreira told Mr Cachalia that he was going to respond to his questions in writing and some concerns raised by all the members of the Committee. However, MFSA has a regulator which was feared by many of its members. This regulator works as the advocate and protector within the sector of small credit providers. He pointed that there were some of its members who were not following the rules. When a person wants to join MFSA, they must sign a code of conduct. When a small-scale credit provider contravenes the code of conduct, there are disciplinary hearings which are conducted. MFSA has dismissed members in the past for contravening the code of conduct. There was also training offered to MFSA members by the Bank SETA to assist members in complying with the professional code of conduct. MFSA held meetings with the new and old members in November 2016 to ensure that they understand the rules and comply. However, some businesses who find it difficult to comply will sometimes resign from the association. With regards to members of MFSA, there were big players and small players within the association. When some of the small businesses are in trouble they do not come forward to inform MFSA.

In response to Ms Mantashe’s comment, he said the narrative between microfinance, small businesses, regulators and representative of the people was crucial. The real threat to be addressed was that there should social equality in the whole country. Members of MFSA understood the importance of financial inclusion. Some of the members had started to make use of digital technology. However, another challenge facing MFSA was to persuade illegal businesses providing credit to join the association so that they comply with the rules. Credit education was part of the new MFSA initiative so that consumers understand their responsibilities.

He replied that there had been a 50 percent decrease in MFSA members. The membership dropped from 2200 to 1100. However, he emphasised that the industry was at an immature and developmental stage. Part of the reasons for the decrease was because some businesses were not able to incorporate technological developments which are costly. Some do not have the capital to comply with MFSA requirements. Some of the businesses sell their branches to banks while some decide to operate outside of MFSA. More so, there are some members of MFSA who give credit to SASSA grant recipients. However, these members are very careful with SASSA members because if they do not assess their circumstances properly, they lose out on the money and the debt of the recipient will be written-off. In terms of transformation, there has been a growth of black people joining the association across the country.

On retrenchment, he replied that it was possible to estimate the vulnerable sectors where there could be a likelihood of retrenchment such as mining. He said that credit life insurance was an excellent product, however if the Bill was to make it mandatory, it was necessary to engage with actuaries to make the correct estimates and assessments. On the question of fines and penalties, he only intended to speak for small businesses and not commercial banks or other big credit providers.

Mr Cachalia said reckless lending had not been discussed properly. Viceroy had issued a report on Capitec Bank showing their reckless lending practices. The Viceroy Report pointed to reckless lending as one of the unfair practices taking place. The issue was critical and had to be addressed swiftly since it was one of the reasons the Committee proposed debt intervention.

Mr Williams asked what percentage of MFSA membership books were managed by black people. However, he requested MFSA to respond in writing,

Mr Ferreira said the way in which Capitec Bank was operating and doing business was different from small business. Small business had lost some of its customers to Capitec even though they serve a different group of people. The NCR may also visit the MFSA offices to evaluate its books. He had not read the Viceroy Report and could not comment fully.

The Chairperson said he should respond later in writing so that all the Committee members understand MFSA’s position.

Nedbank submission
Mr Pragnesh Desai Head of Nedbank Retail and Business Banking Credit stated that Nedbank recognised that it had a responsibility not only to be good with money, but more importantly to do good with it. Nedbank’s concern was on who should qualify for the debt intervention. A greater portion of the money lend out by Nedbank came from its customers deposits and savings. He emphasised that it was important to ensure that whatever money was lend out to consumers must be paid back because its customers are the ones who stand to lose if the loans are not paid back. He submitted that to resolve over-indebtedness sustainably, Nedbank supported a design of equitable debt intervention mechanisms. He pointed out that Nedbank was already offering debt intervention measures to its customers through debt restructuring, assisted sales of property, debt counselling, freezing of payments for a certain period and stopping or suspending legal action against defaulters. It said that the threshold of R 7 500 was not sufficient and suggested that the Committee needed to reconsider other factors and requirements to assess eligible consumers. Mr Pragnesh Desai proposed that the Committee could consider ‘debt service ratio’ as another criterion to determine who would qualify for the debt relief measures.

He highlighted that the remedies sought by S88A-F of the Draft Bill would impact the various debt intervention measures that Nedbank applied to its entire consumer population. Moreover, Nedbank said that it was totally against the notion that banks should bear irrecoverable right of costs and that it was unfair. It further opposed the criminalisation of reckless lending arguing that credit lending was a guided process subject to judgements, assessments and evaluations. It also argued that the current legislation (e.g. Banks Act, Companies Act, Financial Sector Regulation Act) already attached punitive consequences to directors found guilty of any intentional recklessness of duty. Mr Desai was of the view that there was a surfeit of legislation penalising both banks and its directors for failing to act with the necessary diligence to protect various stakeholders, including consumers. Therefore, the introduction of criminality provisions of the Draft Bill in the absence of clear intent on the part of directors and/ or prescribed officers was unfair. The Bill failed to balance the interests of consumers and credit providers in that there were no similar sanctions provided for consumers who mislead credit providers when applying for credit. In his view, it was unfair to criminalise reckless lending since credit providers would run the risk of prosecution. He added that there was no case before any court which had declared the act of lending criminal but only the charging of higher interest rates and unfair collection practices. He recommended that the Committee must seriously reconsider the provisions introducing criminal penalties.

In conclusion he submitted that section 106 dealing credit life insurance be a subject of further research since it was not clear how the insurance policy could be obtained since some credit providers are not registered as insurance companies to offer the product.

Discussion
Mr William requested that Mr Desai should put the proposal of who should qualify in writing so the Sub-Committee can look at it.

Mr Cachalia asked how Nedbank was implementing its suggested equitable debt intervention measures and what those specific measures were. He further asked if Nedbank had any constitutional issues with the Bill which must dealt with. He wanted to know how the Bill would affect Nedbank negatively, if its compliance and profitability was good. He asked, how can Nedbank contribute to the cost of debt intervention?

Mr Mbuyane asked how Nedbank would assist the Committee to deal with the criminal penalties on reckless lending and if it had any suggestions.

The Chairperson asked if Mr Desai was aware that the Act provided that a credit provider must assess a consumer’s financial circumstances before granting credit. She further asked why some banks feel the need to reward clients for honouring their credit agreements by offering another credit product electronically? She said, Is that not reckless or criminal?

Mr Desai replied that Nedbank was going to respond in writing on how the Sub-Committee could deal with who should qualify for debt intervention. In response to Mr Cachalia’s questions, he said that debt counselling process did not work well for low income earners and there was a need to devise another method. In terms of constitutional issues, Nedbank did not have concerns, but the Banking Association could give sectoral concerns. On the question of how the Bill would affect the financial sector, he stated that the act of lending was based on an objective judgement and that on its own should not be criminalised. Credit giving was always a judgemental activity and that is why the banks have a concept of expected losses.

He replied to Mr Mbuyane’s question emphasising that aggressive marketing was not appropriate and the Act also prohibited such conduct. For that reason, the Act prescribed that there should a proper discussion between the borrower and lender before credit is offered.

Mr Desai asked the Chairperson to clarify her question

The Chairperson stated that in South Africa and other countries credit providers should actively engage with clients before granting credit. Banks are globally required to have an engagement with clients before lending to assess whether they want to credit or if they can afford to pay back.

Mr Desai agreed with the Chairperson and added that it was the practice that banks and other credit provider should abide by. He further stated that it was inappropriate, and clients should ask for the credit. Banks will not contact the clients before the client makes the initiative. The client should authorise the bank to check his/her credit profile first and make an assessment if the client qualifies. If it was done without such proper consultation it could be defined as a grant.

The Chairperson asked he did not think that offering the grant without first engaging with the client was criminal. She said, even if the money was offered as a grant, interest would accrue and for that reason, there must be an engagement and assessment of the necessary information before the money is released.

Mr Desai agreed. However, he said that a grant was different from credit since a credit requires a client to make a request first and contact the bank, then the bank would look at the credit profile and past payment behaviour of the client.

The Chairperson stated that her comments were not directed at any specific banks but a general comment. She thanked Nedbank for the constructive input and recommendations. 

Agriculture Business Chamber submission
Mr Theo Boshoff, Head of Legal Intelligence, said that the AgBus represented the agricultural value chain which are input providers such as seed, fertilizer and machinery manufacturers; financial institutions and insurance companies, logistics, off-takers, agro-processors; and market linkages. Most of the South African farmers relied on credit to acquire inputs like seeds, tractors, and fertiliser and without credit it would be difficult for them to farm.  

AgBus members operate in a risk sector since in some years if there outbreaks of pests or a drought they may fail to pay the loans. This would be something beyond their control and such risks need to be considered when offering credit to farmers. AgBus was concerned about these provisions in the Bill:
• Provide the NCR with the power to suspend reckless credit (Clause 82A);
• Provide the Tribunal with the powers to declare credit reckless and extinguish the debt (clause 82A read with clause 130 (4) (e) (ii)
• Place an obligation on debt counsellors and other credit providers to report suspected reckless credit agreements (Clause 82A).

It was AgBus’s view that the intention to provide the NCR with greater functions in relation to the investigation of reckless credit was important. However, Mr Boshoff stated that the ability of NRC to unilaterally suspend credit agreements was problematic for the following reasons:
• Such a decision would be administrative action and must comply with a fair procedure;
• The fact that NCR can initiate, investigate and adjudicate on the matter allowed it to be both player and referee;
• The credit provider should also be entitled to state its case, in line with the audi alteram partem principle.

Mr Boshoff proposed that the NCR should be involved in investigating reckless lending and give the information to the Tribunal which must then decide the specific order to be granted. He submitted that it was vital to understand the unique nature of agricultural finance and risk assessment for reckless credit. He pointed that the current section 82 of Act was sufficient to address the issue, and that AgBus would welcome the opportunity to assist the NCR to develop a guideline on how to apply this criteria in the context of production finance. If the farmer became over-indebted due to circumstances such as drought, hail etc. It should not retrospectively be reckless credit if it was not foreseeable at the time.

On the obligation of credit providers and debt counsellors to report reckless credit, AgBus submitted that agricultural production finance was not consumer credit in its true form. Therefore, AgBus was concerned that this obligation could be misinterpreted by other credit providers and debt counsellors. In addition, credit providers outside the agricultural sector would not know how the risk was assessed when production finance was granted. As such, this would negatively affect a farmer in his personal capacity, and an agribusiness would be erroneously reported for reckless credit;

More so, AgBus submitted that it was unnecessary to have Clause 88F because agribusinesses already had plans with their client’s in instance of draught, hail or anything unforeseen. He cautioned the Committee not to use a ‘one-size-fits-all’ intervention which would be prescribed. He was of the view that if an intervention was prescribed, it could cripple the agribusinesses, farmers may access production inputs required to farm once conditions are favourable again. Therefore, such an outcome would be a tragedy for all involved and endanger food security. He further submitted that a debt, whether secured or unsecured would qualify as ‘property’ within the context of section 25 of the Constitution. He submitted that extinguished of the debt could be challenged in terms of section 25(1) of the Constitution. AgBus was of the view that it would irrational to extinguish debts when a natural disaster was temporary and could be remedied by a rearrangement of repayment terms. Therefore, he recommendation that clause 88F (4) (c) be deleted.

Section 106 (1A) of the Bill placed an obligation on a consumer and credit provider to obtain mandatory credit life insurance for debts not exceeding R50 000 over a term of more than 6 months. AgBus strongly urged the Committee to reconsider the provision for the following reasons:
• The provision would be workable if the credit provider can underwrite a credit life insurance scheme and regulate the costs thereof
• Unless the applicant finds an insurer willing to underwrite him/her at the costs prescribed by the Minister, the credit provider would not legally be able to extend credit as it will be in breach of the Act
• This will result in credit exclusion of the poor;

Credit life insurance was not required as a condition for a credit facility as multi-peril crop insurance is far more relevant.

He submitted that section 157B (1) (d) which seeks to criminalise prospective reckless credit agreements also presents some challenges. AgBus believed that there should be sanctions for reckless lending, but criminalisation may not be suitable. Hence, it recommended a streamlined administrative fine,

Discussion
Ms Mantashe expressed her gratitude for the well thought recommendations. She would appreciate it if all the stakeholders could also make their recommendations.

Mr Esterhuizen stated that there should be a balance between financial institutions and consumers.

The Chairperson said she agreed with Mr Boshoff that farmers were mostly in difficult positions. The Committee also noted that the AgBus would prefer crop insurance instead of credit life insurance. This speaks to the different needs of each sector. She thanked him for the inputs and showing how the interests of each sector should be considered carefully.

Comments from Prof Michelle Kelly-Louw (UNISA)
She expressed at the onset that she did not represent any association, but her comments where for any ordinary consumer and academics. The Bill intended to change the objectives of section 3(g) of Act. She suggested that the wording of the Bill must be reconsidered. This was because the amendment of that provision and taking out of debt restructuring could create a culture of non-payment amongst consumers. Debt restructuring mechanisms were supported by the credit industry because of this general principle that debt should eventually be repaid. Hence tampering with this principle could jeopardize the working of debt restructuring in general.

Her view was that it was burdensome to oblige one credit provider to report suspected reckless lending committed by another credit provider as provided in section 82A(1). This was because the section shifted the responsibility unfairly since credit providers might not have access to all the information of a consumer, particularly when the relevant credit agreement was concluded with another credit provider. Therefore, she suggested that this proposed section be deleted or amended.

Debt intervention mechanism as provided for in the proposed Bill aimed to include consumers earning an income not exceeding R 7 500 per month and a debt of less than R 50 000 as at 24 November 2017. These requirements were unclear as to how the amount of “not exceeding R7 500 per month” had been determined. She emphasized that the memorandum to the Bill was silent on this issue. For her the reason for capping the proposed outstanding debt at R50 000 as owed on 24 November 2017 made no practical sense. She proposed that the proposed provision should be amended so that it caters for consumers that have no income and no realizable assets and should be available on a continuous basis. She recommended that an overhaul of making the whole debt restructuring process simpler and cheaper for all over-indebted consumers should be considered.  

She further said that the right to write-off any debts for vulnerable consumers as referred to in Bill needed various safeguards. There should be a duty to prove that the consumer was looking for employment and draw a distinction between a consumer voluntarily resigning from his employment and a consumer being retrenched. Merely writing off a debt if a consumer has no income or is unemployed will promote an environment of non-payment.

The Bill also excluded certain credit agreements (eg, development credit) to form part of the debt intervention mechanism. She was of the view that, this would create an unnecessary loophole for credit providers as well as consumers. Credit agreements could simply be described as “development agreements” either by the consumer or the credit provider to circumvent these provisions.

Moreover, the proposed debt intervention mechanism did not consider the impact of administration orders, as regulated by the Magistrates’ Courts Act. One consumer could be under administration and debt intervention. It would be undesirable to have the same consumer subjected to two different mechanisms simultaneously in dealing with his debt. She vehemently stated that if government was serious about debt alleviation, attention must be given to creating a single, effective, simple and cheaper debt alleviation mechanism that caters for all debts and not only for certain debts.

She pointed out that it was doubtful if the NCR will have the capacity to cope and deal with these debt intervention applications because of the location. She was of the view that the provisions in section 88C(2)(c)(i) were too wide. Her reasons were that the period of “not exceeding 12 months” was too long. She suggested that consumers should receive some of moratorium. The Bill did not provide for credit providers to oppose, partake or make suggestions during the debt intervention applications. The process did not balance the rights of the credit provider with that of affected consumers. A further area of concern was the limitation on the consumer’s right to apply for credit after a successful debt intervention was obtained. She suggested that this aspect should be reconsidered. If this was not done, the consumers could be marginalized and fail to access any credit.

She further submitted that there was a conflict in the provisions set out in proposed section 88F. In proposed section 88F(2)(a) a reference was made to a situation where there is “widespread job losses”. However, section 88F(3)(b) stipulated that the qualifying persons are “persons with an income of less than R7 500”. She highlighted that these provisions were unclear as to whether they referred to unemployed consumers who lost their jobs or to those who earn a salary. She proposed that if the Minister was permitted to prescribe debt intervention, such measures should be limited to consumers who lost their jobs and remain unemployable for a long period of time. She proposed that the power to declare a credit agreement or term unlawful in terms of section 89 and section 90 of the Act, should be reserved for courts. She argued that members of the Tribunal who hear cases may not have a law background. Her view was that it was also inappropriate to criminalise failure to pay debts and send consumers to jail for 10 years as proposed in section 161(1) of the Bill.

Discussion
The Chairperson thanked Prof Michelle Kelly-Louw for her input. She asked her how one would deter perjury. What is the penalty for perjury?

Prof Kelly-Louw replied that she did not know the penalty for perjury

The Chairperson asked her to research the information and advise the Committee later

Prof Kelly-Louw said some consumers were not aware of what perjury constitutes, and some could lie about their financial information without knowing that they are committing an offence. She added that because of the reason, consumer education had to be prioritised so that consumers understand how to use credit products.

Mr William asked if Prof Kelly-Louw was being paid by anyone to present her opinion. He explained that the reason he had asked was because her opinion was in favour of the credit provider.

Mr Cachalia stated that he agreed with everything that Prof Kelly-Louw had suggested

Mr Esterhuizen pointed that the Act and its regulations mandated credit bureau to receive, compile and maintain information of consumers and the credit bureau easily access that inform from credit providers. He further agreed with the professor’s recommendations to include consumers who do not have assets and not limiting eligibility based on the R 7 500 cap.

Prof Kelly-Louw replied to Mr Williams that she did not represent any group but had only presented objective opinion about the Bill. She was an academic who was also involved in the original drafting of the Act and she was only passionate about her work. She was not being paid by anyone. Her opinion was to advance the interest of all the poor consumers even the ones who do not have any income and do not own assets.

She stated that a credit provider cannot determine that a credit agreement entered by one consumer and another credit provider was reckless. However, automatic reckless lending would be wherein the credit provider fails to conduct an assessment as contemplated in Act. Another credit provider would not know if the assessment was done by another credit provider when the agreement was entered. This was the reason she had submitted that giving the burden to another credit provider was unfair. She proposed that the Committee could amend and specify that if the credit provider suspects that an agreement was entered recklessly, then they would have a duty to report and not criminalise it. She further stressed that the write-offs of debts might not meet section 25 of the Constitution requirements since a debt constitutes property - as submitted by other presenters

Mr Esterhuizen said that he agreed with her that the R50 000 cap for the principal debt did not make practical sense.

The Chairperson disagreed with Prof Kelly-Louw that Section 88F giving the Minister powers did not present any conflicts as emphasized by professor the category of the people and circumstances in which the Minister could prescribe debt intervention was wide and was not limited to a few sectors or certain individuals as she had submitted. She was on the view that the comment which suggested that the cost of borrowing might go up because of the burden placed on credit providers, such a behaviour or response by credit providers would be abhorrent. She was however, thankful for Professor’s recommendations and criticism

Prof Kelly-Louw said consumers are being marginalised and if the Bill was not considered carefully, the same poor people could continue to suffer.  

The Chairperson said it was prudent to always consult with all the stakeholders to ensure that consumer interests and the credit providers are well balanced

Ms Mantashe stated that there were sections of society which think that it was appropriate to feed on the carcasses of the poor. When the big banks were bailed out, no one objected.

The Chairperson reiterated Ms Mantashe’s comment and said stakeholders had to take note of such comments.

South African Institute of Professional Accountants (SAIPA) submission
Ms Faith Ngwenya, SAIPA Technical Executive, stated that SAIPA represented more than 10 000 professional accountants. SAIPA was interested in the Bill since its members assisted consumers and medium sized business that enter into credit agreements and some its members were business and financial advisors for the consumers.

Ms Lethokihle Dlamini, SAIPA Legal Specialist, submitted that it was important that section 69(3) of the Bill provides a timeframe within which a credit provider must give the information to the credit bureau so that the delays do not affect the consumer negatively. In terms of an order contemplated in section 88(c) 4, SAIPA submitted that even if the conditions of a consumer had not improved and they have partially defaulted, their personal information should be completely removed from the credit bureau. She argued that the intention of the Bill was to have its provisions implemented and if the bad credit record of the consumer was kept of the credit bureau’s profile, it would affect the consumer’s prospects of obtaining further credit.

She said that section 82A (6) had to be reconsidered. SAIPA’s view was that a consumer might be prejudiced by interest accumulated during the suspension of the alleged agreement. It therefore proposed that no interest should accumulate on the suspended alleged reckless credit agreement, and such interest be reinstated upon communication by the NCR to uplift such a suspension to avoid potential prejudice against the consumer.

More so, SAIPA stated that the definition of an applicant as contemplated in section 88A(1)(a) specifically provides for ‘a minor/child heading a household.’ She suggested that this definition was too narrow and could be extended to persons under the age of 21. These persons under 21 could be employed or unemployed and heading a household. She said that the Draft Bill did not have a definition of what constituted an ‘immediate household’ despite providing for such in Section 88A(1)(b)(v). The Committee had to clarify the definition of ‘immediate household. To avoid uncertainty or unreasonable delay in setting the application down for consideration in terms of section 88(C)9, SAIPA was of the view that there must be guidance for a reasonable period should be considered appreciated. The period for setting the application down for reconsideration should be prescribed.

Discussion
Mr Esterhuizen stated that the suspension of two years as stipulated in section 88(C) was too long. He further said he agreed with some of the recommendations by SAIPA and other presenters. He expressed the view that changing the age range of beneficiaries to persons under the age of 21 would be too risky. He understood that young people support households, but it would be difficult to prove it.

Mr Cachalia was concerned about finding a balance to ensure that the vulnerable consumers get the needed assistance and at the same time avoid putting pressure or onerous burden on the credit providers. The Committee was dealing with debt intervention and some of the comments made seemed to be misplaced.

The Chairperson requested clarity on what Ms Dlamini meant when she proposed that interest should not accrue to avoid the consumer being jeopardised.

Ms Ngwenya replied that SAIPA’s concern was that interest charged for a debt should be suspended pending the application being reviewed or head by the NCR. If the interest accrued and the application takes long to be heard, it would be unfair for the consumer. She insisted that it was the reason SAIPA recommended timeframes for the application processes.

Ms Dlamini replied to Mr Esterhuzien’s question stating that her comment on increasing the age from 18 to 21, was to address the definition of ‘child headed household’. It would not make any difference to extend the age limit to 21 since most children who are 18 years or under are mostly unemployed.

The Chairperson thanked all the entities and stakeholders for their constructive criticism and recommendations. She reminded the Committee that Mr William had suggested that certain measures needed to be taken to freeze the price of water in Cape Town. She vehemently said that she was cognisant of the crisis and its impact on the vulnerable consumers. However, the Director General of DTI had advised the Committee to forward the proposal to the National Consumer Commission to deal with bottled water prices. She said that the Committee would next meet on 13 February after State of Nation Address.

The meeting was adjourned.