Monday, March 30, 2015

National Credit Amendment Act and Regulations

The National Credit Amendment Act (NCAA) and Regulations were released and effective the same day – Friday 13 March 2015. There are some important issues we wish to highlight for your immediate attention. And also to note TPN is busy with the system changes required to ensure compliance.

Automatic removal of adverse consumer credit information

All adverse information recorded on a credit bureau must be removed once the debt has been settled.

Our members who submit their adverse information (Defaults) to the credit bureau are required to inform the credit bureau within 7 days of their client settling the amount to which the default relates.

Currently TPN requires our members to update any defaults which have been settled to a “Paid-up” status. TPN will continue to require this “Paid-up” status update, which will have the effect of the removal of the default from the consumer’s credit profile.

Changes made to the Retention Periods for displaying information on the credit bureaus

Category of Consumer Credit Information
Description
Maximum Period
Change
Details and results of complaints
Number and nature of complaints lodged and whether a complaint was rejected. No information may be displayed on complaints that were upheld
6 months
TPN does not display. No change
Enquiries
Number of enquiries made on a consumer’s record, including the name of the entity/person who made the enquiry and a contact person if available
1 year
Previously 2 years
Payment Profile
Factual information pertaining to the payment profile of the consumer
5 years
No change
Adverse classification of enforcement action
Classification related to enforcement action taken by a credit provider
1 year (or deleted when settled)
Previously 2 years
Adverse classification of consumer behaviour
Subjective classification of consumer behaviour
1 year (or deleted when settled)
Previously 1 year
Debt Restructuring
As per section 86 of the Act, an order given by the Court or Tribunal
Within the period prescribed in section 71(1) of the Act or until a clearance certificate is issued
Previously until a clearance certificate is issued
Civil court judgements
Civil court judgements including default judgements
The early of 5 years, rescission or abandoned by the credit provider
Previously 5 years
Maintenance Judgements in terms of the Maintenance Act
As per court judgement
Until the judgement is rescinded by a court
This is a new category of data not previously held by the credit bureaus
Sequestration
As per the court order
5 years or until rehabilitated
Previously 10 years
Rehabilitation
As per court order
5 years
No change
Administration order
As per the court order
5 years or until order is rescinded by court
Previously 10 years oruntil rescinded by court

Note: “Liquidation” and “Other Information” categories have been removed.

Changes made to the requirements before loading Adverse Information (Defaults) to a credit bureau:

The requirements to load an adverse listing have been increased – a summary of the old vs. the new requirements are listed below.

Previously
New Regulations (15/03/2015)
 
No prescribed debt may be loaded on a credit bureau
 
Minimum instalment has not been paid for a minimum of 3 consecutive billing cycles
Consumer must be given 20 business days notification of intention to list
Consumer must be given 20 business days notification of intention to list
 
No adverse maybe listed if the consumer pays any arrears owing on an account are settled within the 20 business day’s notification period.
 
If the arrears is settled subsequent to the listing – it must be removed from the credit bureau in the next data submission

Note 1:
The new requirement that the minimum repayment instalment must be a minimum of 3 consecutive billing cycles in arrears will undoubtedly lead to longer periods between actual payment defaults and listing on the credit bureau – (rent and credit) payment profile information is now more valuable than ever.  

Imagine a school which has quarterly payment cycles – no adverse listing may be loaded on a credit bureau unless 3 consecutive quarterly payments have been missed either in full or part. Albeit no adverse listing may be loaded, the payment profile indicating the non or partial payment may still be loaded.

The TPN RentCheck is the most comprehensive enquiry available for tenant screening – the full rental payment profile and credit payment profile provides early warning indicators of rent or credit accounts in arrears before adverse or judgment listings.

Note 2:
The new requirement that the minimum instalment must be a minimum of 3 consecutive billing cycles in arrears prior to adverse listing does not prevent you from taking legal action in the normal course of business – such as a letter of demand, cancellation of services, court action.

Changes made to performing credit enquiries for the purposes of employee screening

A consumer credit record may not be accessed by an employment agency, recruitment consultant, staffing company or employer unless they certify that any and all requests for consumer credit records relate to positions requiring honesty in dealing with cash or finances and the job descriptions of such positions are clearly outlined.

This does not impact recruitment companies or employers performing qualification checks, criminal checks and employment verification checks such as the TPN StaffSure enquiry on any and all potential employee candidates.

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