Banking Association of South Africa supports the National Credit Acts

The Banking Association of South Africa, the representative voice of banking in the country, today offered its support to the National Credit Act (NCA), which comes into full effect on 1 June 2007.

Cas Coovadia, Managing Director of the Banking Association comments, "The NCA will bring about significant change in credit granting processes within the consumer and commercial lending environments."

"Historically, the credit environment has been inefficient with instances of poor credit lending processes and irresponsible borrowing. The NCA reflects the minimum legal requirements for an efficient and responsible credit lending industry, and will empower consumers to make informed and responsible credit borrowing decisions."

The NCA will apply to every credit agreement granted as of 1 June, and will help educate consumers to borrow responsibly. Credit lending institutions will also be more accountable for their credit lending decisions.

"The entire banking industry has been working for over a year to ensure that the implementation of the NCA takes place seamlessly and effectively. The NCA is a major development in banking for us, and will facilitate a more informed credit decision making process  by lenders and borrowers, thus having a positive effect on debt levels in the country," concludes Coovadia.

Consumers are urged to contact their banks and other credit lending institutions with any queries they may have.
 
The National Credit Act Fast Facts

Effective 1 June 2007
Reasons for implementation:
* To help prevent consumers from borrowing more than they can afford

* To ensure that credit providers lend responsibly

* Appropriate credit regulation through the National Credit Regulator, a National Consumer Tribunal and a debt counselling service

* To help and educate consumers about making informed credit borrowing decisions

The NCA applies to the following transactions:
*  Credit cards, overdrafts, mortgages, instalment agreements, leases and micro-loans

Applying for credit under the NCA will involve the following:
* All consumers applying for credit will receive a quotation from the credit lender

* All quotations must disclose the full costs of the credit applied for including all credit facility management fees

* The quotation is applicable to the credit provider for five days, during which time the consumer can obtain competitive quotes

* The consumer needs to provide the correct information (statement of income and costs, household budget, race, marital status) to the lender for a credit assessment to be done

* Records of credit agreements will be sent to the Credit Bureaux

* Credit providers need to keep records of all credit applications

* For couples married in community of property the NCA requires the written consent of the spouse when the other spouse applies for credit

The NCA also aims to protect consumers from misleading advertising. Phrases such as "no credit checks", "free credit" and "guaranteed loans" cannot be used
Credit agreement information will become available in languages other than English
Under the NCA, consumers are entitled a credit report once a year, in the month of their birth