Credit information amnesty on the cards again

Credit information amnesty on the cards again

Leading information services company Experian SA found that more than two million South Africans could be affected by a proposed credit information amnesty that seeks to provide relief to indebted consumers and improve their access to credit. 

Experian SA was commissioned by the National Credit Regulator (NCR) and the Department of Trade and Industry (dti) to investigate the impact of the proposed credit information amnesty.

If implemented, this will be the second such amnesty in six years.  The amnesty proposes that any judgements granted against consumers between 2006 and 2011 equal to or below R10 000 be removed from the records, irrespective of non-payment, but not written off.

It also proposes that judgements above R10 000 granted between 2006 and 2011 be removed from all credit records on submission of evidence of settlement.

Furthermore, accounts on which no payment were received for a period of at least 24 months up until December 2012 will be removed if the amnesty is implemented. These exclude accounts where there is no contractual requirement for monthly payments to be made.

Experian SA found that for the impacted consumers, approximately seventy percent earn less than R10 000 per month.

“The removal of public information – judgements and defaults – does not change the fact that these accounts are performing badly as profile information doesn’t change. These behavioural trends are still identified by scorecards that are the main tool used to assess probability of poor repayment,” said David Coleman, Head of Analytics at Experian SA.

“As such, based on our findings, the only industry that the amnesty will have some impact on would be the micro lending industry, where impacted consumers are expected to score higher. More stringent affordability criteria needs to be considered, the definition of dormant information should be redefined and the impact of the global financial crisis on the middle class should be considered,” he said.

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