Credit Information Amnesty Concerns
Sales and Marketing Director
No, it won’t be an Aprils Fool’s joke (unfortunately), it’s true. From the 1st April, Credit Bureaus must remove the “adverse consumer information” and “information relating to paid up judgements” from their data banks within 2 (two) months from the effective date.
Department of Trade and Industry Minister, Rob Davies, said it had been noted that in several cases bad credit records of consumers that have paid up their debt still remained blacklisted by credit bureaus and that proper affordability assessments to acquire debt had not been done. In some instances consumers, who had paid up their debt, were still found to be blacklisted because the process to get one’s name off the list was a costly and lengthy one involving courts.
Why isn’t this a clever move? Well, Bureaus will still have the full payment profile of a customer, so lending institutions will still be able to assess past behaviour, but to pre-empt the using of this information in a payment profile, the regulations say that the expunged information is not allowed to be used in a score nor in any credit assessment.
Also, by nature lending is risky, and the more complete information there is on a borrower, the more comfortable the lender will be to lend. The natural inclination now will be to assume that the borrower could have a “scrubbed up” past. If lenders see their arrear rates increasing because of this amnesty, we could quite easily see lenders margins increasing.
It’s vital that we as lenders and you as Estate Agents have a stable and growing property market in South Africa, and we’re concerned this is a counterproductive move on that front.