National Credit Regulator

Presentation by:

Acting Chief Executive Officer:

Ms Nomsa Motshegare

About The N C R

NATIONAL CREDIT

REGULATOR

Presentation Overview

Who is the NCR

Objective of the NCA

Consumer Credit Market in South Africa

Debt Counselling

Blitzkrieg Campaign

Consumer Education

Who is the NCR

CEO

Registrations

Complaints

&

Call Centre

Investigations

&

Enforcement

Consumer

awareness

& education

Credit Bureau

& Research Statistics

& Research

Debt Counselling

monitoring &support

100< staff members

Department of

Trade & Industry

Board of

Directors

Departments of

Finance, Housing &

Social Development

Parliament of SA

NCR, Est. By Act of Parliament: NCA,34 of 2005

Support Services:

IT, HR & Finance

The Objectives of the NCR

The purpose of the Act is to promote and advance the

social and economic welfare of South Africans,

promote a fair, transparent, competitive, sustainable,

responsible, efficient and accessible credit market

and industry, and to protect consumers

Consumer Credit Market

in South Africa

Credit Providers 18.4 million Credit Active Consumers

2,027

Debt Counsellors

R1.2 trillion consumer credit

consumer credit -35 million outstanding

accounts

Credit Providers = 4,755 Branches = 36,000

Credit Bureaus = 11

Credit Bureau Statistics

Debt stress & defaults

Credit performance of 18.8 million consumers, as reported by credit providers to bureaus. Covers both credit agreements and all other forms of debt or financial obligations

Ongoing increase in consumers with impaired records, from 36% in Jun’07 to 47% in Jun’11.

The number of consumers with impaired records increased by 2.7 million since June 2007.

Credit-active consumers have increased from 16.8 million in June 2007 to 18.8 million in June 2011.

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Credit standing of consumers

Credit standing of consumers – June 2011 The percentage of consumers with

impaired records increased to

46.7%, comprising 18.5% of

consumers with three months or

more in arrears, 13.9% of

consumers with adverse listings

and 14.3% of consumers with

judgments and administration

orders.

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Credit reports issued

Credit reports issued to consumers have increased by 35 000

since December 2007.

More consumer education still needs to be done to encourage

consumers to request their credit reports.

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Credit granted vs. Debtor’s book

-The value of credit granted was R85.08 billion for the quarter ended

June 2011

-The value of total outstanding gross debtors book is R1.2 trillion

New credit granted –percentage distribution

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Performance of the debtors book that is in “current”

based on the rand values

Debt Counselling

Role of debt counselling in assisting consumers to deal

with the impact of an economic down-turn and debt-stress

Problems which are preventing effective implementation

DEBT STRESS

Consumer credit impact all areas of economic life = purchase of

houses, cars, appliances … etc

Contraction in credit, huge impact: drop in demand; drop in

production; losses in job & commissions … property prices

Feed through into debt stress … more houses on market, 2nd

round of fall-out, with huge impact on financial system & society

Debt counselling designed to mediate this process … to create a

„safety valve‟, a mechanism to resolve all cases possible of

resolution

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Debt Counselling current position

0

50000

100000

150000

200000

250000

300000

Client Applications

R 0.00

R 50.00

R 100.00

R 150.00

R 200.00

R 250.00

R 300.00

Millio

ns

Monthly Distribution to Creditors

2027 debt counsellors registered, five accredited payment distribution agencies.

NCR - extensive monitoring + support mechanisms + investigations & enforcement

276,601 + applications cumulatively, growing at 6,000 pm; Monthly distributions to creditors now approx R235 million

for approximately 65 000 consumers.

Cumulative R5.4 billion to CPs. 90% of payment received by banks come from accredited PDAs.

Despite challenges, debt counselling already played a huge role in mediating between debt stressed consumers and

their credit providers but challenges remain.

Blitzkrieg Campaigns

The abovementioned project was executed in Eastern Cape in

conjunction with the following government stakeholders;

o National Credit Regulator (NCR)

o National Prosecuting Authority (NPA)

o Eastern Cape Commercial Crimes Unit (ECCCU)

o South African Police Services (SAPS)

o South African Social Security Agency (SASSA)

Blitzkrieg Campaign

The last campaign in October 2011 conducted in 4 surrounding

townships of the City of Port Elizabeth.

The purpose of the campaign was to investigate operations of

unscrupulous credit providers.

A number of “Skoppers” were arrested.

Police also found the suspects in possession of pension cards, ID books

and bank cards.

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RECENT RAIDS IN E/CAPE

Consumer education

Summary of Act & short brochures on different aspects

… in all official languages & available on www.ncr.org.za

Consumer Education

Since its inception the NCR has consistently made a concerted

effort to educate and inform the South African public about the

NCA and the NCR’s role and responsibilities as per its mandate

from the Act.

We fund all our education programmes. We also partner with all

the 9 Provincial Consumer Affairs Offices .

Consumer Education

The Education programmes are targeted at all South African consumers

through:

o Consumer Advice Centers;

o Labour Unions,

o Non-Governmental Organisations (NGOs);

o Government Departments/Institutions;

o Provincial Consumer Protection Offices;

o Employers/Private sectors

o Traditional Authorities and

o Other civic bodies.

Consumer Education

Communication Tools:

o Seminars for professional bodies;

o Capacity Building Workshops

o Consumer Education Workshops

o Road shows

o Exhibitions

Consumer Education

o Resources File ( Presentations; Material on financial literacy;

Broachers; Consumer Booklet; Radio Script; NCA & Regulations )

o Consumer Booklet

o NCR Website

o Billboard

o Print Media (Editorial and advertisements), broadcast (interviews

with NCR’s spokespersons) and electronic media editorials.

Consumer Education

Communication Campaigns:

o Spend and Borrow Wisely (November/December)

o Consumer Month (15 March: International Consumer Rights Day)

o Youth Month (16 June)

o Women’s Month (09 August)

o Worker’s Month (1 May)

Consumer Education

South African Savings Institute joint campaigns with the NCR:

Targeted students in all South African tertiary institutions’ campuses.

The aim of the campaign is to create awareness amongst tertiary

students on their rights and responsibilities when taking up credit, debt

management and the importance of saving.

Consumer Education

BASA Campaign with NCR:

o In an unprecedented move to deal effectively with consumer debt

related challenges, the Banking Association of South Africa (BASA),

the National Credit Regulator (NCR), and the Debt Counselling

Association of South Africa (DCASA) launched a joint national

consumer awareness campaign in 2010.

Consumer Education

o The joint campaign by key stakeholders in South Africa’s banking

and credit regulatory environments was a first for the industry and

aimed at addressing adverse consumer behaviour trends as well

as promote a better understanding of debt counselling, including

expected conduct by consumers

o The campaign, was funded by SA leading banks; ABSA, African

Bank, Capitec, First Rand, Nedbank and Standard Bank conveyed

key messages through a national advertising and publicity

campaign, with very specific calls to action:

Consumer Education

Financially distressed consumers:

o Not yet in default or debt counselling:

o Already in default but not in debt counselling

o Already in debt counselling and paying something to their creditors.

o Already in debt counselling and not paying anything to their creditors.

Consumer Education

Since inception - end of September 2011

o Number of workshops – 2 057 Audited Numbers)

o Number of participants – 241 580 (Audited Numbers)

o Hits on website – 979 795

o Total Advertising Value Equivalence (AVE) - R393 million

Disabled Community Programme

The Governments Social Grant System also caters for people with

disabilities who are unemployed. This also makes them potential

victims to unscrupulous micro lenders that are targeted by the

Blitzkrieg. Those who are economically active also find themselves

marginalized from some of the education programmes that we

undertake

Therefore the NCR has in the past made efforts to develop special

educational programmes that were tailor-made for hard at hearing

(deaf) and blind people.

Disabled Community Programme

Train the Trainer Programme:

The rationale was for trained participants to train their respective

constituencies on the NCA and role of the NCR

Blind Programme:

o National Council for the Blind (NCB) was engaged in mobilizing

participants from all nine provinces of South Africa.

o NCA Consumer Booklet was translated into the brail language.

Disabled Community Programme

Hard at Hearing (Deaf) Programme:

o The Deaf Federation of South Africa mobilised participants

in all 9 provinces of South African.

o Professional sign language interpreters were secured to

assist NCR consumer education officers during the

workshops.

Consumer Education

Soul City Television Series:

The NCR will for the first time explore new communication channels through

the above mentioned television series. It is anticipated that by partnering with

an edu-entertainment like Soul City will derive the following benefits:

o The series as one of the most watched television programmes ( more than

50% of the total TV viewers watch Soul City) in the country will role-model

action that will educate and assist viewers about their rights and

responsibilities as consumers when it comes to credit matters and also will

highlight the roles and responsibilities of the NCR within the credit market and

simultaneously educate the viewers about the NCA.

Consumer Education

How do we evaluate Education Initiatives/Programme?

o Workshop Evaluation Questionnaire for Capacity Building

Workshops Evaluation Sheets are issued at the end of the workshop

to measure effectiveness of the content and presenters.

o Through the call center we are also able to determine the

effectiveness of our communication strategies by asking the calling

public how they got to know about the NCR for example, Electronic:

Print Media, word of mouth or attended an NCR run workshop.

Consumer Education

Impact Assessment:

o Since 2008, the NCR has commissioned an impact assessment study

on an annual basis to evaluate the effectiveness of Awareness and

Education Campaigns and performance of the implementation of the

NCA. The 2010 major findings were:

• The NCA and NCR’s awareness levels are at 70% (54%:2008)and 73%

(51%:2008) respectively.

• Awareness levels among low-income group remains relatively low.

• There is limited understanding of credit terminology.

• There is limited awareness of consumer protection avenues, including

debt counselling.

• NCR staff are perceived as being helpful and responsive.

• Media: Effective in use of media in increasing public awareness

THANK YOU