Picture: THINKSTOCK
Picture: THINKSTOCK

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THE national credit regulator has been mandated to research overindebtedness and reckless lending, with a view possibly to recommend a debt amnesty programme that could come as a relief for millions of South Africans.

The mandate comes from Parliament and follows a briefing on Tuesday by regulator CEO Nomsa Motshegare, who noted that there were 10-million overindebted consumers in the country.

Ms Motshegare suggested that some form of debt forgiveness should be considered as consumers were facing increasing price pressures because of rising inflation.

Trade and industry committee members, before whom Ms Motshegare appeared on Tuesday, noted that other countries had introduced debt-forgiveness programmes, with chairwoman Joan Fubbs saying overindebtedness could not be ignored.

The national directorate of public prosecutions will also be asked about progress with its investigation of former African Bank CEO Leon Kirkinis and the bank’s former directors.

Democratic Alliance spokesman on trade and industry Geordin Hill-Lewis said it was unacceptable that no action had been brought against them, three years after the collapse of the bank.

Ms Motshegare said that in the first six months of the 2015 financial year, the regulator had pursued 44 cases against credit providers that were referred to the National Consumer Tribunal, and resulted in millions of rand being refunded to consumers. The cases included those involving the imposition of garnishee orders on salaries to repay debts.

In total, R67m had been refunded to consumers in overcharged insurance products during the period to the end of September, Ms Motshegare said.

Large retailers Edgars and Lewis were among those investigated by the regulator.

Nine credit providers paid fines amounting to R4.4m following orders made by the tribunal. In addition, identity books and social grant and bank cards held illegally by credit providers were seized.

Ms Motshegare said several credit providers had been arrested in raids in the Western Cape.

Investigations focused on the sale of retrenchment and occupational disability insurance to pensioners and consumers receiving social grants, who had no need of them; overcharging of credit life insurance; reckless lending; credit providers obtaining default judgments in magisterial districts different to the areas where the debtors lived so they were unable to defend themselves; overcharging of fees; and misleading advertisements.

Ms Motshegare said the regulator conducted spot checks on the interest rates charged by banks. It was also collecting information on the affordability assessments which banks were supposed to undertake before granting loans.