Earlier this week, parliament’s Portfolio Committee on Trade and Industry was briefed on the new National Credit Amendment Act. As part of the briefing, parliament received a socio-economic impact assessment study (SEIAS) on how the act will impact banks, government and consumers. The socio-economic impact assessment was conducted by Genesis Analytics.
Fin24 reported that the Genesis’ findings indicate that although the bill intends to address financial inclusion, the impact would be the opposite. “Parliament may not have had sight of all the ‘unintended consequences’ of the Bill. We respectfully suggest that the proposed solution may not be the most appropriate to achieve the laudable goals of helping vulnerable consumers, in fact it is likely that the proposed solution will ultimately harm the wider group of lower income earners,” the report read. According to Genesis the benefits are outweighed by the negative impact.
Genesis highlighted that any consumer earning less than R7 500 who is not over-indebted – approximately 11.7 million consumers with outstanding debt of R71.4bn – would not benefit. It is expected lenders will adjust lending patterns due to the perceived higher risk created by the new debt intervention system, coupled with their distrust in regulators to undertake the process efficiently and fairly, according to the report.
Click here to read the Fin24 article.
Click here to read a BusinessTech article that highlights the pros and cons.