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“Confidential” Document Leaked

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DA blows the lid on populist plan by Minister Patel to destroy credit lending market

Dear MyPE

The Democratic Alliance (DA) has received a document drafted by the Department of Trade, Industry and Competition, marked “Confidential” which will have devastating consequences for the credit industry as well as consumers, which seeks to use the State of Disaster to expunge credit records.

While the idea behind this move may seem altruistic and noble, the truth is, Minister Ebrahim Patel is attempting to use populist rhetoric to clean up his battered public image and win over support within the ANC.

The intentions behind this “discussion document” could not be more sinister which will use the Disaster Management Act to subvert Parliamentary oversight and existing credit legislation.

In essence, what this proposal seeks to do is prohibit the adverse listing of consumers by credit and service providers and will remove adverse consumer credit information from credit bureaus.

It also appears that this proposal is a fait accompli as it is explicitly said that the Minister will “consult” with the credit industry before the “publication for implementation”.

The proposed regulations will also seek to apply this plan retrospectively from 1 April 2020 to a proposed to date of 30 September 2020 or for as long as the State of the Disaster continues, which could be many more months or even years.

The real devil in the detail is that consumers will still be liable for any debts incurred up to and including the gazetted implementation of these regulations even though they have had their records expunged while giving the impression of exactly the opposite.

This cumulatively will have the effect of allowing indebted consumers to continue to become burdened by further debt they incur which they will still be liable for once the State of the Disaster has expired.

What Minister Patel is doing is nothing short of populist and suicidal for the credit industry. Instead of using existing provisions within the National Credit Act, like the DA had proposed in April this year, he is subverting the Act and Parliament. There is no way that the Disaster Management Act was ever envisaged to be used like this.

The bottom line is that these regulations will further drive up the cost of credit for low income consumers, as credit providers will simply be unwilling to lend money to people who need it if they have no mechanism to ensure that consumers who are unable to pay, will be able continue to lend money without recourse.

The DA will be urgently requesting a public Parliamentary meeting with the Minister to explain his actions with these proposed regulations as well as inviting credit providers to make their input public.

We will not allow Minister Patel’s populist plans to destroy the credit market which millions of South Africans rely on to get by each day under a State which has totally destroyed their ability to earn a living.

Regards

Dean Macpherson MP
DA Shadow Minister of Trade and Industry

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