The National Credit Amendment Act (known as the Debt Relief Bill) was signed into law in August 2019. The key amendment relates to individuals who earn R7 500 or less a month, and who owe less than R50 000 in unsecured debt. They may now apply to the National Credit Regulator (NCR) for debt intervention, and based on the NCR's assessment, have all or part of their debt eliminated.
Providers of credit, including retailers and banks, and other market participants have raised a number of concerns regarding the Bill. To date, its practical implementation remains uncertain with no effective date and no guidelines set for how eligible consumers may apply for debt intervention.
There is also disagreement on the number of consumers likely to benefit from the Debt Relief Bill. A study commissioned by the National Treasury in October 2017 estimates that only 1.5 million consumers are persistently over-indebted, which is defined as being nine months or more in arrears. A further study commissioned by the Department of Trade and Industry estimated that only around 177 000 consumers could benefit from the Bill.
We have been following developments on these regulatory changes since they were first proposed, and have performed a detailed impact assessment. TCRS has a granular view and detailed understanding of all individual debtors in our portfolio, and in our assessment, we identified the consumers likely to apply for debt intervention. In the normal course of our collection activities, these consumers are typically assigned a low propensity to pay score and would not be selected for collection or factored into our valuation of estimated remaining collections on that book.
This means that the Debt Relief Bill will have little impact on TCRS's contingency collection activities, or on the carrying value of NPL portfolios acquired as principal. We have put measures in place to train our call centre agents to deal with Debt Relief Bill queries to help consumers understand their rights as we wait for certainty on the Bill's implementation