Business owners who are unable to access credit due to negative information which has been retained on their profiles despite being able to afford credit might see some relief soon if the Removal of Adverse Credit Information Project is approved by government.
This is according to McDonald Netshitenzhe, chief director of policy and legislation at the Department of Trade and Industry (DTI), after Cabinet accepted a proposal by the Select Committee on Trade and International Relations.
“At the moment we have opened the project up for public comment for 30 days, where we will hold workshops and meet with industry players such as the Banking Association of South Africa (Basa) and debtors and also do media interviews to get feedback and create awareness,” says Netshitenzhe.
Three proposals were made by the committee and the medium risk option was chosen, which includes the removal of all adverse information listings by credit bureaux irrespective of value and non-payment, the removal of all adverse paid-up information listings by credit bureaux on an ongoing basis, and the removal of all paid-up judgement information held by the credit bureaux on an ongoing basis.
Commonly known as credit amnesty, the project will see negative information removed off some 1.6 million affected consumer credit bureau profiles if approved and aims to give those with impaired credit profiles who are able to afford credit, access to credit.
According to Netshitenzhe, the amnesty is a result of a study by government which was done to see whether it was “doable to remove the impaired records of people who could afford credit” in order to grow the economy.
“Our economy is not thriving because consumers are heavily indebted,” says Netshitenzhe.
He says it is still unclear how far back they will look when removing the adverse information, but that removing negative information from consumers’ profiles would be ongoing as is being done in Brazil.
Sidwell Medupe, spokesperson for the DTI, stressed that this should not be confused with debt being written off.
“Negative information will be removed but they will still be liable to pay the debt as it will not be written off,” says Medupe.
The DTI is currently busy drawing up an awareness campaign aimed at educating consumers on the amnesty.