Consumer Credit Bill Review: workshop

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
19 October 2004
CONSUMER CREDIT BILL REVIEW: WORKSHOP

Credit Law Review: Overview of Background Research: PowerPoint Presentation
Credit Law Review: Background Research: PowerPoint Presentation
The Cost, Volume and Allocation of Consumer Credit in South Africa: PowerPoint Presentation
Credit Law Reform Workshop - "Setting the Scene": PowerPoint Presentation
Credit Law Review - "Overview and Background Research": PowerPoint Presentation
Black Sash briefing on the Consumer Credit Bill
Department presentation: Industry: Consumer and Corporate Regulations Divisions
The Cost, Volume and Allocation of Consumer Credit in South Africa

Workshop facilitators: Ms A Ludin, Mr M Moeletsi, Ms B Marony, Mr G Davel (Micro Finance Regulatory Council)

SUMMARY
This was the first day of the Department of Trade And Industry's two-day workshop on whether the Consumer Credit Bill should be reviewed. In four presentations, the Department presented findings from the Technical Committee tasked to conduct the review, and summarised important aspects of the current Bill. The Black Sash NGO had also been invited to present its opinion on the Bill, and this organisation was broadly in support of the legislation reform. Members asked many questions of clarification and suggested the need for plainer, more accessible language in any new bill.

MINUTES

Department briefing
The Chairperson stated that the Portfolio Committees on Justice and Finance would not be able to attend this meeting as scheduled, due to other obligations.

The Department made four presentations, and particularly highlighted the weaknesses in consumer credit legislation; the research conducted to gather the perspectives of consumers, industry representatives and stakeholders in the review process, and the policy document generated after the review.

The Department stated that since 1968, many factors had impacted the consumer credit market, such as significant political, social and economic changes, combined with major technological advances. The presentation also analysed the primary and general findings of the research, outlining factors that contributed to the high cost of credit, and factors that undermined market forces

Black Sash briefing
Ms Lauren Nott stated that her organisation supported the Consumer Credit Bill's move away from current debt collection practices, as outlined under the Debt Collection Act, and was pleased that these were to be the last resort for consumers in debt.

Discussion
The Committee had many concerns and questions of clarification. Highlights among these were the issue of the high debt problem for many poorer South Africans due to rising bank charges. Another issue of major concern was the clear interpretation of the Bill into the eleven languages.

Members wanted to know the role and influence of banks in the Bill formulation process. Members were also concerned about the purpose of the Bill and how it would benefit small business borrowing.

The Department responded that detailed interrogation of the Bill would later answer all of these queries. The current process was an internal procedure to inform the Bill before it got to Parliament.

The presenter also stated that it was difficult to set a uniform 'plain language' standard, but the Department would try to ensure that all laws were written plainly. The Department welcomed Members suggestions on improving plain language on an ongoing basis.

The Chairperson stated that Members of Parliament were equally affected by what was going on in society. They were answerable to their constituents who saw them as wealthy members of society

The meeting was adjourned.
www.thedti.gov.za

Appendix.

 

The following publications, including research reports and expert opinions produces as part of the credit law review process: available on the dti website -

The dti : Policy doccuments : Making Credits Markets Work
HAWKINS, DR. Penelope : The cost volume and allocation of consumer credit in South Africa. Feasibility (Pty) Ltd March 2004
REALITY Research Africa : Credit contract disclosure and associated factors. December 2002
RUDO Research and Training. :A market research report: credit law review. December 2002
DYMSKI, Professor G A : Interest rates and Usury in emerging markets. University of California. March 2002
HOFMEYR HERBSTEIN & : Report for the purposes of the credit law review. December 2002
GIHWALA INC
MEAGHER, Patrick : Regulation of payday lenders in the United States. IRIS Center . University of Maryland March 2004