Circular 06 of 2018 - Request for written comments - reckless lending fee category

CIRCULAR 06 OF 2018 In September 2018, the National Credit Regulator (NCR) through circular no.5 of 2018, issued a notice of its intention to withdraw the reckless lending fee category from the Debt Counselling Fee Guideline. This notice has been published in the Government Gazette for public comments and the credit industry is invited to submit written comments to dcinfo@ncr.org.za by 31 October 2018. Below is a table of the proposed amended restructuring fee category from the Debt Counselling Fee Guideline:

Request for written comments-reckless lending fee category 1 Number 06 | October 2018 Step Services Amount (excl. VAT) By when it should be paid Restructuring fee (a) Acceptance process as per Form 17.2(b); (b) Restructuring proposal preparation; (c) Loading the plan on the debt counsellor’s PDA*** profile; (d) Negotiating with credit providers; (e) Submitting the final restructuring proposal; (f) Supplying debt counselling documents to an attorney to draft a court application; (g) Updating the DHS*; For a single application (one consumer): (a) the fee is either equal to the distributable amount** or a maximum fee of R 8 000, whichever amount is the lesser. For a joint application(more than one consumer and usually married in community of property): (a) the fee is either equal to the distributable amount or a maximum fee of R 9 000,whichever amount is the lesser. Payable in Month 1 and only after the drafting and submission of the restructuring proposals. Should a Debt Counsellor fail to submit proposals to Credit Providers or refer the matter to the NCT **or a Magistrate Court within 60 business days from date of the debt counselling application, the Debt Counsellor has to refund 100% of the restructuring fee paid by the consumer (excluding the application and administration fee). Should there be more funds remaining from the consumer’s distributable amount after payment of the restructuring fee, the debt counsellor should where feasible encourage the consumer(s) to make payments to credit providers within the same month. RESTRUCTURING FEE CATEGORY TO BE AMENDED

GLOSSARY *DHS means the Debt Help System; **Distributable amount means the amount payable to the credit providers as per the initial debt re-arrangement plan; ***PDA means a Payment Distribution Agent registered with the National Credit Regulator I terms of Section 44A of the National Credit Act 34 of 2005 as amended(“ the Act”); and NCT means the National Consumer Tribunal as established in terms of the Act. 2 Number 06 | October 2018 Step Services Amount (excl. VAT) By when it should be paid (h) Transferring of the consumer(s); (i) Instruction to an attorney to draft a Court application / collation and filing of NCT application; (j) Withdrawal by consumer(s) (Form 17.W process); (k) Conducting the reckless lending allegation (as per section 86(6) (b) of the Act; (l) Notifying the consumer(s) and credit provider(s) of the outcome of the assessment; and (m) Supplying reckless lending documents to an attorney to draft the affidavit on the assessment outcome.

FOR MORE INFORMATION Please direct all queries relating to this notice to the following NCR officials: Tshepa Molefi tmolefi@ncr.org.za or 011 554 2627 Pule Songo psongo@ncr.org.za or 011 554 2655 Georgina Kgadima gkgadima@ncr.org.za or 011 554 2896 Mmadikwa Phoshoko mphoshoko@ncr.org.za or 011 554 2659 3 Disclaimer: While the NCR has taken reasonable care to ensure the factual accuracy of this circular, it cannot guarantee such accuracy especially with regards to future events. Accordingly, NCR does not accept any liability for damages incurred by any party as a result of decisions or actions taken on the basis of information supplied in this Circular. Number 06 | October 2018