SUBMISSION TO THE PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY
THE NATIONAL CREDIT BILL
Ms S. BOOLEY
19 AUGUST 2005
I am addressing the committee as a consumer; and as a community worker and as someone who has seen many lives ruined due to people being in the unenviable position of being on that notorious BLACKLIST. Something which has spelt the black death for many of our people in South Africa. Poor people for whom the government wants to alleviate poverty and graduates whose skills are keenly sought in helping growth in the economy. These are the people on whose behalf I wish to raise certain concerns with the Committee.
We want to align our submission strongly with that of the Black Sash and the FSCC. However, not only would we like to the Committee to consider a once-off amnesty for those on the blacklist, but further also a once-off forgiveness of the debt of these people on the blacklist. This is important, because the Committee has heard earlier in the week about some of the unethical and unconscionable methods deployed by debt collectors in the relentless pursuit of debt recovery – even after people’s names have fallen off the blacklist–often trying to get blood from a stone; "by any means necessary". For example if someone has a judgement and their name falls off the blacklist after 5 years, debt collectors could still pursue that debt for 30 years. This is why it is imperative that along with the once-off amnesty for those on the blacklist, there should also be a once-off forgiveness of debt for these people.
"A people’s contract: fighting poverty, creating jobs." This was the election manifesto of the ANC during the last election. In the State of the Nation Address earlier this year, the President lamented the duality of the economy: the affluent and flourishing first economy and the dismal and depressed second economy. The President also said that the glaring skills gap should be dealt with as this is key in job creation and addressing the disparities between the two economies in our country. The President wants to half poverty by 2014 and for there to be more vigorous growth in the economy.
Nevertheless, the unregulated behaviour of Credit Bureaux and Debt Collectors have thus far, wittingly and unwittingly, undermined the plan the President has for the nation.
Allow me, Chairperson, to cite some examples of how the Credit Bureaux and Debt Collectors have ruined peoples lives and harm our economy. In the 1980’s Person X had a bursary from the Department of Education, but his studies were interrupted when he was forced into exile. In 1994 Person X returned from exile, having obtained a Masters Degree in Economics. Shortly thereafter, Person X began being hounded by sheriffs and debt collectors to repay the bursary to the Department of Education. Person X began looking for a job, but was unable to get a job due to the judgement against his name. 20 years on Person X still cannot find a job due to this judgement and is routinely harassed by debt collectors. Where ever they trace Person X to, they will attach whichever belongings they find at the place he stays; whether or not it belongs to him. The burden is then on person X to prove that the belongings do not belong to him in order to have them released. After Government had passed the BBBEE Act and other enabling legislation for SMME’s to stimulate the economy, person X approached a bank applying for finance to start a small business. Of course his application was turned down on account of the judgement against his name. Person X is educated and has exactly the skills needed in the South African economy. By now Person X could have made a meaningful contribution in his community or the South African economy at large. If Person X were granted the loan to start a small business, he could by now have been employing several people in his community and helped give meaning to the President’s plan for the nation. Instead Person X has been relegated to a life of economic alienation, a life of poverty and a life of being hounded by debt collectors for 10 more years. There must be thousands of graduates in Person X’s position. Multiply this number by the social costs and the impact this has on growth and development in South Africa – and the cost, I would argue, would by far exceed the debt we are requesting be forgiven. Writing off the debt can only be in the national interest.
Person Y bought a house with her husband when they got married. They took out a bond of R180 000, for which they were jointly and severally responsible. Two years into the marriage her husband’s gambling resulted in him no longer upholding his contribution to the bond repayments. The husband also became physically abusive to Person Y and their child. Person Y wanted to leave the marriage, but did not want to lose the house. The bank had begun sending threatening letters due to non-payment as a result of her husband’s non-payment. She approached the bank to explain her situation. She said she would be happy to buy over the house from her husband and to honour all the repayments if the house belonged to her alone. Her husband however, neither wanted to contribute to bond repayments, nor sell the house to Person Y. The bank repossessed the house, sold it at auction for R150 000 and still has a judgement against both person Y and her husband for R170 000. When she sought an explanation from the bank they said that the R170 000 is the amount once interest and legal costs and other charges have been taken into account. Can the DTI clarify whether or not the "In Duplum" rule would address such abuses?
Furthermore, the Constitution guarantees our right to shelter, as a basic human right as well as our right to dignity. Even the Freedom Charter says that "there shall be housing, security and comfort". However, when banks repossess a home which is the only shelter a person has, we humbly submit that this should be unconstitutional. Another remedy should be found in cases like these. The housing crisis in the country is dire enough and should not be exacerbated by practices like these, which rob people of their dignity.
The Constitution guarantees our right to privacy. This Parliament has passed the Access to Information Act as well as the Electronic Communications Transactions Act: The Electronic Communications Transactions Act prohibits the sale of citizen’s personal information. However, the very business of the Credit Bureaux is to make a business of the sale of citizen’s personal information. Moreover, it is very disturbing and a travesty that the Credit Bureaux has personal information about you that you yourself do not know or have access to; and up to now have had to buy from them. We are happy to see that the Credit Bill begins to address this.
Consumers should also be protected from unscrupulous and misleading advertising. How often have we seen furniture or even a car being advertised where only the monthly instalment is advertised, but the cash price of the product is not revealed.
Of course Credit Bureax are important to the optimal functioning of the financial sector and the economy. However, the unregulated manner in which they have operated thus far and the unethical behaviour of Credit Bureax and Debt Collectors is what has prompted this legislation and we thank the DTI and the Committee for this.
It is therefore also important that we start on a clean slate by clearing the blacklist and forgiving the debt of the poor. Members of the Committee earlier in the week expressed concern that should that happen, a blank credit record may then be viewed prejudicially. A remedy could then be to make it unlawful to prejudice a blank credit record.
South Africa today has one of the most unequal societies in the world with a gini co-efficient of very close to 1. Due to our political history most of the people who have negative credit histories are poor black people – the very people government is targeting with its enabling policies. We have no doubt that should there be a once-off amnesty and a forgiveness of debt, that, contrary to what some might say, this will actually have a positive impact on the economy. People who have gone underground to hide from debt collectors and who have had to become creative in managing their affairs, can surface again and use their creativity for the good of all. It will allow poor people to access the little bit of finance they need to make a big difference in their lives; to find a job; start a small business or a co-operative and even create jobs for other people. A situation like this can only stimulate growth and investment in the economy.