South Africa’s Minister of Trade and Industry, Rob Davies has conceded that Africa’s second largest economy was passing through a dark phase calling on credit providers not to take advantage of consumers.
“We are passing through a difficult period economically; its origins are the impact of the end of the commodity super cycle and the negative effect this is having on the mining industry,” Davies told CNBC Africa.
“This means there is going to be less disposable income around and we have to make sure credit providers are not involved in practices they could use to their benefit and to the detriment of consumers.”
Davies said the past year has seen an upsurge in people who are credit impaired.
“We have already seen that the figures of people who are credit impaired compared to last year March are going in the wrong direction,” added Davies.
“One of the messages we are sending out is that we delayed the implementation of the Credit Assessment Act until the end of September to allow credit providers to get their systems in place.”
Davies urged credit providers to be open with consumers as they prepare for the new regime.
“It's high time credit providers tell people what is happening as it looks like many are not preparing for the new regime,” he said.
“There is work being done on garnishee orders, we are also addressing things like life insurances which is being attached to credit agreements."
Davies said some of the life insurance products sold have been completely unnecessary.
“We have had cases of pensioners who were sold products which protected them against retrenchments when they are not employed longer,” he added.
“Our overall message to the financial sector is that don’t try to play hard and fast with consumers as we will do our bit to defend consumers.”