New+hope+for+millions+on+credit+blacklists,+B+Day




 * Business Day, Johannesburg, 19 September 2005**

=**New hope for millions on credit blacklists**=


 * Linda Ensor, Political Correspondent**

CAPE TOWN — Hope of a new beginning has been extended to some of SA’s 3-million blacklisted debtors whose negative debt profiles will be reviewed in terms of regulations to be issued under the National Credit Bill.

The trade and industry department has responded to calls for an amnesty for blacklisted debtors by introducing a new clause in the bill — still under scrutiny by Parliament’s trade and industry portfolio committee — which will force Trade and Industry Minister Mandisi Mpahlwa to come up with regulations to deal with the matter.

Credit providers welcomed the “wise and prudent” approach to the problem, but continued to warn that removing “risk predictive” data held by credit bureaus would undermine their ability to extend credit at the lowest cost.

The clause does not go so far as to require the expunging of all negative credit data — called for by organisations such as the South African Communist Party, the Black Sash and the Congress of South African Trade Unions, which have complained that blacklisting results in the further overindebtedness of the poor, who are forced to turn to loan sharks.

The clause requires the minister to produce regulations on the nature of consumer debt, and the timeframe, form and manner in which consumer debt information held by credit bureaus must be reviewed, verified or removed.

Information held by credit providers, which is private and is not publicly shared, will not be affected.

The minister will have to decide on the timeframe and manner in which consumers can access, free of charge, the information on them held by credit bureaus within the first year after the law takes effect.

When formulating regulations, the minister must consider the predictive nature of the information and the socioeconomic impact on communities of its removal. He will also have to consult affected stakeholders.

Acting committee committee chairman Ben Turok said many debtors were innocently in debt either through administrative or technical errors or oversight.

Trade and industry department proposals are for the deletion of default and judgment information for amounts under R100 within the first three months of the regulations coming into effect; and the once-off deletion of information on paid-up judgments older than three years.

To achieve the data verification and clean up, it is proposed that an independent audit of credit bureaus information is undertaken.

The audit reports would be tabled with the regulator.

Trade and industry deputy director-general Astrid Ludin said credit bureaus could easily expunge historic information.

“This is not so much an amnesty but the once-off removal of certain information,” she said.

Consumer Credit Association chairman Ian Wood said he did not believe there was information held by bureaus that could be expunged without affecting the viability and sustainability of the credit industry.

Wiping out information would make it harder for credit providers to determine risk levels.

Credit Bureaus Association executive director Sheena Singh said credit bureaus did not have a vested interest in retaining negative information about consumers.


 * From: http://www.businessday.co.za/articles/frontpage.aspx?ID=BD4A93278