Consumer Credit Bill Review: workshop

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Trade and Industry

19 October 2004
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Meeting Summary

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Meeting report

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



Chairperson: Mr B Martins (ANC)

Documents handed out:
 

"Making the Credit Market Work - A Framework for Consumer Credit": Department PowerPoint presentation
"Overview and Background Research to the Credit Law Review": Department PowerPoint presentation
"Overview of the Consumer Credit Bill": Department PowerPoint presentation

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

SUMMARY
The Department held the second day of a two-day workshop on review of the Consumer Credit Bill. The Department presented findings from the review Technical Committee and summarised important aspects of the Bill. The Committee asked many questions of clarification. They also raised concerns about the effect and extent of the legislation on the market; about South African bank charges in comparison to other countries studied, and asked whether the Bill leaned in the favour of consumers or lenders.

MINUTES

Department briefing
The Department delved into the scope of the current consumer legislation such as the Usury Act, the Usury Act Exemption, the Credit Agreements Act, the Sales and Service Matters Act and the Alienation of Land Act.

The Department further reported that the consumer credit market in South Africa was dysfunctional, thus prompting the name of the policy document, "Making Credit Market Work". The Department summarised its review of the Consumer Credit Bill and stated that sixty submissions on the Bill had been received from the public, and evaluations had been made of those submissions. Based on the evaluation, some initial but not substantial changes had been made to the Bill. The Department stressed that many issues still needed to be checked with the Department of Justice.

Discussion
The Committee asked many questions of clarification. They also raised concerns about the effect and extent of the legislation on the market; about South African bank charges in comparison to other countries studied, and asked whether the Bill leaned in the favour of consumers or lenders.

The Department responded that they needed to ensure that access to credit meant the public was protected and not cheated. However, the Bill was only a partial solution to this situation. South African bank charges were far higher than in all the other countries studied, including the United States, United Kingdom and Brazil. Making the Bill available in eleven languages could incur a financial burden as this cost was high.

The meeting was adjourned.

 

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