Tag: National Credit Regulator

Source: Fin24 

Some 40% of the credit provided by the country’s top 10 credit providers appears to be reckless, a new survey has found.

The Reckless Lending Indicator, released by debt counselling firm DebtSafe for the first time, is based on data from the top 10 credit providers in South Africa for the period of April to July 2018.

Of 5 591 credit agreements investigated, 51% appeared not to be reckless, while 40% appeared to be reckless.

Of the remainder, 7% reflected agreements prior to the National Credit Act and 2% comprised other agreements.

“The analysed data of the top 10 credit providers, based on agreements that appear to be reckless, suggests that the ‘big’ credit providers are playing a major role in the reckless lending environment in South Africa,” DebtSafe said in a statement.

These lenders include – in order – First National Bank (FNB) with 12% of the agreements that appeared to be reckless; Capitec with 6.5%, African Bank with 5.5%, FinChoice with 5.1%, Nedbank (MFC) with 5.0%; Absa and CapFin each with 4.7%; and Standard Bank with 4.2%. Last on the list are Nedbank (3.9%) and Old Mutual (3.9%). All remaining providers accounted for 44%.

The latest statistics released by the National Credit Regulator (NCR) in March 2018 indicate that SA has 25.46 million credit-active consumers. Meanwhile, 9.7m consumers – totalling 38% – have impaired credit records.

According to DebtSafe, this means “almost one in every 25 credit-active consumers that sit with an impaired credit record […] might be over-indebted”.

Over-indebted in three clicks

“It is shocking and scary to know that consumers can pave their way to over-indebtedness with just three clicks using modern-day technology. These days it is all too ‘normal’ to not only apply for credit but to also get it approved within a few seconds. The concerning question here is: does the credit provider conduct a thorough affordability assessment to make sure that the consumer can keep up with the agreed upon payments?” DebtSafe said.

Matthys Potgieter, debt expert and spokesperson at DebtSafe, said, “Previously consumers went to creditors to ask for credit, but now things have changed, and instead, hard-selling credit comes directly from the creditor to the consumer.”

According to Potgieter, consumers may be confronted with pre-approved loan applications via various mobile apps or other methods like SMS, email and telephone calls.

“Before consumers click ‘accept’ on such an application, I would like to ask them the following question, ‘If you withdraw or use all this money on the same day, would you be able to afford the loan’s instalments in future?’ and if they answer ‘no!’ – then they, with the click of the ‘accept’ button, will already be over-indebted,” he said.

The National Credit Regulator (NCR) will investigate Standard Bank’s new credit card fee, according to a report in the Sunday Times.

The bank has been charging a standalone monthly “card fee” of between R10 and R210 to customers who use its credit cards only, with the fee depending on the type of card the customer uses.

The card fee was implemented at the beginning of 2018 and is charged in addition to the monthly service fee of R40.

According to the NCR, the Credit Act has a closed list of charges a credit provider can levy on customers – and the card fee is not one of them.

The NCR said it would investigate Standard Bank’s card fee and take approporiate action if the fee is found to be illegal.

According to Standard Bank’s pricing guide for 2018, the card fees are as follows:

Gold, Blue, and Access cards – R10.00
Titanium standalone – R25.00
Platinum standalone – R40.00
World Citizen standalone – R210.00

The report follows SA Consumer Satisfaction Index results in 2017 showing that Standard Bank customers are the least satisfied.

Standard Bank did not respond to requests for comment sent by the Sunday Times.

Source: MyBroadband

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