National Credit Regulator Registration and Compliance Division Oct - PowerPoint PPT Presentation

National Credit Regulator Registration and Compliance Division Oct 2012 1

����������������������������������� Interest & fees Marketing Reckless lending practices & disclosure Agreements Enforcement & & quotes NCA debt collection Unlawful Credit Bureaus agreements, National Credit Register provisions Unlawful agreements, provisions 2

Functions of the NCR • The National Credit Regulator derives its mandate from the National Credit Act (NCA/the Act) 34 of 2005. Paramount among its duties is the: • Creation of an accessible credit market • Registration Credit Providers Debt Counselors Credit Bureaux 3

Functions of the NCR • Enforcement – dispute resolution, – receiving and investigating complaints – contraventions of the NCA • Awareness through – research and publication of industry trends • Reporting on credit information 4

Registration & Compliance milestones as at 30 September 2012 1 965 debt counsellors 5 227 credit providers 5 227 credit providers Registration 5

Focus on developmental credit • In terms of S. 13 of the NCA, one of the duties of the NCR is to create an accessible credit market to serve the needs of among others: • Historically disadvantaged persons: • Low income persons and communities; and • Remote; low density populations and communities in a manner consistent with the Act 6

What are developmental credit agreements? • In terms of S. 10 of the NCA, an agreement irrespective of its form; type or category is a developmental credit agreement if: • At the time the agreement is entered into, the credit provider holds a supplementary registration certificate issued in terms of an application issued in terms of S.41, and 7

What are developmental credit agreements? (Cont.) • The credit agreement must be: • Between a credit cooperative as credit provider and a member of that cooperative: • An educational loan; or entered into for any of the following purposes: • Development of a small business; • The acquisition; rehabilitation, building or expansion of low income housing or • Any other purpose prescribed by the Minister in terms of S. 10 (2) (a). 8

Who may register as a developmental credit provider? • A registered credit provider or an entity who has applied to be registered as a credit provider in terms of S. 40, may apply for supplementary registration as a developmental credit provide; provided: • It is a juristic entity; • Is registered with the South African Revenue Service (SARS); and • Does not employ or have an individual who would be disqualified from individual registration in a controlling or management capacity. 9

What other factors are taken into account?: • Supplementary registration as a developmental credit provider will only be granted of the NCR concludes that: • The credit provider has sufficient human; financial and operational resources to efficiently and effectively carry out its functions in terms of the Act, or presents the NCR with a credible plan to acquire or develop those recourses . 10

What other factors are taken into account? ( Continued) • The Credit provider must also show that it has adequate administrative procedures and safeguards to justify the application of statutory exceptions to from the Act, or present the NCR with a credible plan to develop those procedures and safeguards before entering into any developmental credit agreement. 11

The advantages of being a developmental credit provider 12

The advantages of being a developmental credit provider • Statutory exceptions to certain provisions of the NCA. • In terms of S. 78 of the NCA, S. 81- 84 of the Act in as far as they relate to reckless credit, do not apply to the following: 1. a school loan or educational loan; 2. an emergency loan; 3. a public interest credit agreement; 4. a pawn transaction 5. an incidental credit agreement; or 6. a temporary increase in the credit limit under a credit facility 13

The advantages of being a developmental credit provider • Further, in terms of S. 82(2) of the NCA, the National Credit Regulator may pre-approve the evaluative mechanisms; models and procedures to be used in terms of S. 81 in respect of proposed developmental credit agreements. 14

Summary of benefits • In a nutshell, the advantages of being a developmental credit provider are: a) higher interest rate that a credit provider can charge in respect of developmental credit agreements in comparison to other categories of credit agreements; and b) statutory exceptions to the reckless lending provisions of the NCA provided certain preconditions are met. 15

Challenges • The primary challenge is that there are very few developmental credit providers currently registered with the NCR. Credit Provider Categories 4% CP DCP 96% 16

Questions 17

Thank you www.ncr.org.za Tel 0860 627 627 18