Friday, June 7, 2013

Credit Amnesty 2013 Update


It is time to prepare for credit decision making after the proposed credit amnesty. There are 3 proposed amnesties with varying degrees of risk; the reality of the credit amnesty being pushed through this year is very real; consultation is proposed for June 2013 with issuance of the Notice proposed for September 2013.
 
Regardless of the form of the credit amnesty, entering into lease agreements and other forms of credit or services still requires strict credit assessments and affordability assessments. The amnesty will not lessen this process it will make the process more important as it will be harder to differentiate between applicants who always had clear credit profiles from previously delinquent applicants who have benefitted from the amnesty. It will require more diligence from the agent / landlord / service provider in obtaining fully completed application documents with personal financial declarations as well as collecting supporting documentation such as bank statements or higher deposits from all applicants.
 
The saving grace is monthly recording of Rental Payment Profile information. It cannot be stressed strongly enough the importance and urgency from all our members to ensure their tenant data is accurately, timeously and monthly recorded on the TPN Credit Bureau database on each and every tenant. This way quality tenants are rewarded for their Paid on Time behaviour and delinquent tenants who may benefit from any future amnesty still have reference to their delinquent payment behaviour.
 
The Department of Trade and Industry (dti) and National Credit Regulator (NCR) presented 3 options favouring Option 1 as the most suitable:
 
Option 1
  • Removal of all adverse listing less than R10 000 (irrespective of non-payment)
  • Removal of all Paid Up adverse listings on an ongoing basis
  • Removal of all Paid Up judgements on an ongoing basis
  • Number of consumers impacted: 1,516,960
 
Option 2
  • Removal of all adverse listing irrespective of value and irrespective of non-payment
  • Removal of all Paid Up adverse listings on an ongoing basis
  • Removal of all Paid Up judgements on an ongoing basis
  • Number of consumers impacted: 1,605,763
 
Option 3
  • Removal of all judgements and adverse listing irrespective of value and irrespective of non-payment
  • Removal of all Paid Up adverse listings on an ongoing basis
  • Removal of all Paid Up judgements on an ongoing basis
  • Number of consumers impacted: 2,180,774
 
In conclusion, TPN will keep our members updated on the process, we will assist in suggesting changes to your tenant / client take on process you should consider as and when more details become available regarding the final credit amnesty. You are not powerless – you have the power to contribute in a meaningful way by loading your tenant data accurately, monthly and on all tenants good and bad.

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