IT REMAINS to be seen whether the report of the Farlam commission of inquiry into the Marikana massacre will have significant political repercussions, or result in meaningful reforms to the way the police service operates. However, it is clear from developments last week that the 2012 tragedy is already causing ructions in the financial services sector, especially the market for unsecured loans.
That is because it became apparent in the aftermath of the police shootings that socioeconomic factors — specifically atrocious living conditions and severe over-indebtedness — were among the drivers of the unprotected strike at Lonmin’s Marikana mine, which the police opted to break through the use of force on that fateful day.
Subsequent investigations by the media and civil society organisations showed that in addition to loan sharks operating with impunity in the Marikana community in violation of the National Credit Act, there was widespread abuse of emolument attachment orders by rogue debt collectors acting in concert with corrupt court officials.
Many of the striking miners were not only living in squalid shack settlements on the periphery of the mine property due to a lack of formal housing provided by either Lonmin or the local authority, but were up to their eyeballs in debt, with little left of their take-home salaries after repayments had been deducted.
One consequence of this gross overindebtedness, which the National Credit Act is supposed to prevent, has been a marked step-up in the activity and visibility of the National Credit Regulator, which came under fire for resting on its laurels prior to Marikana.
The regulator, which is tasked with policing the act, has since cracked down severely on money lenders that do not comply with the law, especially with regard to practices such as charging usurious rates of interest and demanding that borrowers surrender their bank cards and PIN numbers so that repayments can be withdrawn the moment weekly wages register in bank accounts.
Last Thursday, shares in retail company Lewis Group fell more than 7% when it emerged that the regulator had asked the National Consumer Tribunal to impose an unspecified fine on the company for mis-selling credit insurance. Lewis, 70% of whose sales of furniture and appliances are on credit to lower-income consumers in small towns such as those on the platinum belt, is alleged to have indiscriminately sold such policies to pensioners and self-employed customers who could not be retrenched or become redundant and, therefore, had no hope of being able to claim for loss of employment.
In addition, the regulator has submitted draft recommendations to the Department of Trade and Industry for drastic changes to the maximum prescribed interest rate that can be charged on unsecured credit transactions. The regulator proposes that the current 32.65% rate be slashed to 24.78%.
The proposals have been published for public comment.
The mining industry has also been compelled by the fallout from Marikana to intervene to tackle the issue of employee indebtedness, especially since as employers they have had little choice but to comply with emolument attachment orders ostensibly issued by courts.
However, last week’s Cape High Court ruling declaring parts of the system unconstitutional on the basis that they lead to the abuse of borrowers’ human rights and limit their right to dignity, will make it easier for companies to refuse to deduct excessive amounts from workers’ wages.
In addition, a case brought by Anglo American Platinum against excessive fees charged by bad debt administrators will have been boosted by the ruling.
Investigations have shown loan sharks operated with impunity in the Marikana community in violation of the National Credit Act Miners strike. Picture: AFP PHOTO
IT REMAINS to be seen whether the report of the Farlam commission of inquiry into the Marikana massacre will have significant political repercussions, or result in meaningful reforms to the way the police service operates. However, it is clear from developments last week that the 2012 tragedy is already causing ructions in the financial services sector, especially the market for unsecured loans.
That is because it became apparent in the aftermath of the police shootings that socioeconomic factors — specifically atrocious living conditions and severe over-indebtedness — were among the drivers of the unprotected strike at Lonmin’s Marikana mine, which the police opted to break through the use of force on that fateful day.
Subsequent investigations by the media and civil society organisations showed that in addition to loan sharks operating with impunity in the Marikana community in violation of the National Credit Act, there was widespread abuse of emolument attachment orders by rogue debt collectors acting in concert with corrupt court officials.
Many of the striking miners were not only living in squalid shack settlements on the periphery of the mine property due to a lack of formal housing provided by either Lonmin or the local authority, but were up to their eyeballs in debt, with little left of their take-home salaries after repayments had been deducted.
One consequence of this gross overindebtedness, which the National Credit Act is supposed to prevent, has been a marked step-up in the activity and visibility of the National Credit Regulator, which came under fire for resting on its laurels prior to Marikana.
The regulator, which is tasked with policing the act, has since cracked down severely on money lenders that do not comply with the law, especially with regard to practices such as charging usurious rates of interest and demanding that borrowers surrender their bank cards and PIN numbers so that repayments can be withdrawn the moment weekly wages register in bank accounts.
Last Thursday, shares in retail company Lewis Group fell more than 7% when it emerged that the regulator had asked the National Consumer Tribunal to impose an unspecified fine on the company for mis-selling credit insurance. Lewis, 70% of whose sales of furniture and appliances are on credit to lower-income consumers in small towns such as those on the platinum belt, is alleged to have indiscriminately sold such policies to pensioners and self-employed customers who could not be retrenched or become redundant and, therefore, had no hope of being able to claim for loss of employment.
In addition, the regulator has submitted draft recommendations to the Department of Trade and Industry for drastic changes to the maximum prescribed interest rate that can be charged on unsecured credit transactions. The regulator proposes that the current 32.65% rate be slashed to 24.78%.
The proposals have been published for public comment.
The mining industry has also been compelled by the fallout from Marikana to intervene to tackle the issue of employee indebtedness, especially since as employers they have had little choice but to comply with emolument attachment orders ostensibly issued by courts.
However, last week’s Cape High Court ruling declaring parts of the system unconstitutional on the basis that they lead to the abuse of borrowers’ human rights and limit their right to dignity, will make it easier for companies to refuse to deduct excessive amounts from workers’ wages.
In addition, a case brought by Anglo American Platinum against excessive fees charged by bad debt administrators will have been boosted by the ruling.
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