Mr Dean Macpherson (Democratic Alliance, MP) input on the National Treasury Terms of Reference Research 
 RQ1: Demographic profile of consumer who use unsecured credit

a.      It is useful to include income groups above R30k per month as these individuals are also in distress.

2.      RQ2: Financial profile of consumers who use unsecured credit

a.	The questions related to debt counselling (proportions of borrowers in income groups have been under debt counselling once or more times, how long is average debt counselling period, how many drop out, profile of consumer who drop out etc.) should be confined to those consumers who entered debt counselling process after January 2011, and who exited after March 2015 with either a Form 19 (clearance certificate) or form 17.wa, 17w.c or 17.w.d. This is crucial for accuracy of information.

b.	There are a number of documented issues with debt counselling data reflected in credit bureaus. The NCR’s debt help system is used to feed the credit bureaus with this information, and it is known that not all debt counsellors use this system accurately and timely. Therefore, what is the data source that is expected to be used for debt counselling related information as part of this research?

c.	The question on “what proportion of credit agreements under debt review are refinanced rather than restructured?” is problematic. No agreements are refinanced under debt counselling as an individual under debt counselling does not qualify for financing.

d.	The impact of credit life insurance or credit insurance has been significant over the years in terms of increasing debt burden on consumers, and curtailing their ability to pay. Therefore, it is important that the impact of credit life insurance in terms of debt burden on consumers is quantified as part of this research question.

e.	Similarly, the awareness of consumers on whether they are paying for credit insurance is rather. Therefore, it would be important to quantify what percent of consumers who are paying for credit life insurance are actually aware that they are paying for it, and what percent of them know how to claim? (If they get retrenched etc)

f.     This research question is meant to focus on consumers who use unsecured credit. While debt counselling would contain some sub-segment of consumers, I am not sure why so many of the sub-questions relate to debt counselling. I would rather suggest that there is a new research question that focuses on “Which are the successful parameters that need to be in place for successful rehabilitation under debt counselling?”

3.    RQ4: Secured credit repayment patterns

a.	I believe there is scope within this research question to look into profiles of consumer who end up in debt counselling. Over 50% of consumers who end up in debt counselling have vehicle finance and/or mortgages, therefore, it is important to analyse these consumers as well.

b.	I also believe the ever-more-popular balloon payments for vehicle finance have had a significant (negative) contribution to ability of consumers to repay. Currently, it is believed that almost two-thirds of all recently-financed vehicles include a balloon payment. Therefore, I believe it is important to analyse the impact of balloon payments as part of RQ4.

4.    RQ5: Lender behaviour

a.	Within this research question, it would be important to quantify the impact of recent (2015) NCAA, where consumers could use 9% of their net income as proxy for necessary expenditure. In particular, a survey on what percent of new credit granted (since 2015 NCAA) was done so on the grounds of using 9% of net income as acceptable amount to be spent on necessary expenses.

5.    RQ6: As indicated above, RQ4 focuses on consumers who use unsecured credit. I suggest that there is a new research question that focuses on “Which are the successful parameters that need to be in place for successful rehabilitation under debt counselling?”
RQ 6: To understand what immediate debt relief can be provided with respect to the reckless loans undertaken by African Bank, of which the bad book is now owned by the SARB. 

RQ7: That all debt repayment agreements should be suspended until such time that the NCR has concluded its final investigations into all loans undertaken by African Bank.