With effect from 1 April 2014, a new regulation to the National Credit Act, 2005 will come into force and bring with it, a sigh of relief for consumers. In the past, consumers have struggled to remove adverse consumer credit information from their credit records with credit bureaus even after settling judgments and paying their debts in full and applications to court to achieve the removal of such information upon repayment of the debt are timely and costly. However, with the commencement of the Removal of Adverse Consumer Information and Information Relating to Paid Up Judgments Regulations, this will no longer be the case.
For purposes of the Regulations ’adverse consumer credit information’ means:
- adverse classifications of consumer behaviour are subject classifications of consumer behaviour and include classifications such as ‘delinquent’, ‘default’, ‘slow paying’, ‘absconded’ or ‘not contactable’;
- adverse classifications of enforcement action, which are classifications related to enforcement action taken by the credit provider, including classifications such as ‘handed over for collection or recovery’, ‘legal action’, or ‘write-off’;
- details and results of disputes lodged by consumers irrespective of the outcome of such disputes;
- adverse consumer credit information contained in the payment profile represented by means of any mark, symbol, sign or in any manner or form.
The Impact on Credit Bureaus:
The new regulations require that, registered credit bureaus must remove adverse consumer credit information, as reflected on a consumer’s records held by any such registered credit bureaus, as at the effective date of the regulations and information relating to paid up judgments within 2 months from 1 April 2014, i.e. during April and May of 2014. Before the expiry of the 2 month period, credit bureaus may request an extension of not more than 7 days for the removal of adverse credit information and information relating to paid up judgments.
Registered credit bureaus are further obligated in terms of regulation 2(e) to notify all other registered credit bureaus within 3 days of removing such information. Within 3 days of receiving notification, such registered credit bureaus must remove similar adverse credit information and information relating to paid up judgments from its records.
Registered credit bureaus are further obligated to ensure during the said 2 month period, that such information is not displayed or provided to any person requesting such information.
Most importantly to consumers, is that Regulation 2(i) provides that after the 2 month period, registered credit bureaus must continue to remove information relating to paid up judgments. This means that all civil court judgment debts (including default judgments), where the consumer has settled the capital amount under the judgment(s) must be removed from the registered credit bureaus records, on an ongoing basis within 7 days after receiving proof of such payments.
The Impact on Credit Providers:
All credit providers are required in terms of the Regulations to submit all information relating to paid up judgments to all registered credit bureaus within 7 days of receipt of such payment from the consumer. Furthermore, a credit provider must not use adverse consumer credit information and information relating to paid up judgments that have been removed for any reason, including credit scoring and assessment.
The Impact on Consumers:
Irrespective of the removal of adverse consumer credit information from a consumers’ credit record, the consumer remains liable to meet his obligations in respect of the credit agreement.
A consumer who is aggrieved by the non-compliance of registered credit bureaus and credit providers with the Regulations may contact the National Credit Regulator.
The Removal of Adverse Consumer Information and Information Relating to Paid Up Judgments Regulations are a welcome addition to the National Credit Act and will assist, in the words of the Minister of Trade and Industry, in removing barriers to, employment opportunities, rental accommodation, as well as access to credit to those consumers who can afford it.