Debt Forgiveness for the Over-indebted
A ‘debt forgiveness programme’ for low-income groups was suggested by Adrian Williams of the ANC. “This shouldn’t be for the rich who have just been spending recklessly,” he said at an NCR brief to MPs. Debt forgiveness entails writing off a portion of debt owed by a financially troubled debtor.
ANC committee chairperson Joanmariae Fubbs pointed out how successful debt forgiveness programmes had been in both developing and developed countries.
ANC Suggests Debt Forgiveness
There are about 10 million credit impaired consumers in South Africa, which means they are in arrears and cannot afford their monthly debt repayments.
On March 15, Parliament’s Standing Committee on Trade and Industry were given a brief about the condition and financial performance of our country’s credit market by the Nation Credit Regulator (NCR).
The gross debtor’s book totalled an alarming R1.63 trillion at the end of September 2015. Moreover, NCR CEO Nomsa Motshegare said that consumers had been granted almost R124 billion in new credit.
The intention of the committee was to find out what measures the NCR had put in place to provide relief to over-indebted consumers and those struggling to repay their debts. As well as how the regulator plans to put a stop to reckless lenders.
Reckless Lending Investigations
In her presentation, Motshegare said that the regulator’s probes into reckless lending, overcharging and deceptive advertisements were ongoing. “Lewis Group has for example agreed to pay a total of R75m to refund consumers since we’ve started the investigation last year,” she said.
The NCR had referred 44 of these investigations to the National Consumer Tribunal (NCT) for hearings, including the Lewis Group.
Last year, a Lewis customer was charged R18 000 in repayments for a washing machine originally bought for R6 000. Another Lewis customer was charged a R650 mandatory delivery fee for a laptop he carried out of the store, on top of a R741 extended warranty.
The DA’s Geordin Hill-Lewis contended that the NCR seems incapable of exerting adequate control over suspected reckless lenders, like the Lewis Group and African Bank.
“In recent months there have been numerous exposures of nothing short of viperous conduct of lenders, such as the Lewis Group. It’s not good enough to refund R67m to customers who had been overcharged when they made much more money than that with the scams they were running.
“Why doesn’t the NCR, the Hawks or the Reserve Bank take serious actions against these institutions? This reinforces the perception that there are no consequences for such behaviours,” he said.
Motshegare replied that it is often a struggle to get the NCT’s legal representatives to agree to hearing dates for investigations referred to the tribunal.
Fubbs brought the brief to a close by confirming that the committee would have the NCT appear before Parliament to update them on the hearings for investigations that are referred to it.