The National Credit Act, Act 34 of 2005 (hereinafter called “the Act”) came into full force and effect on 1 June 2007 and with it came the inception of debt review and debt restructuring.

Since its inception, debt review and debt restructuring have posed operational and procedural challenges for the credit providers, debt counsellors and consumers alike.

In order to solve some of these challenges, major credit providers, in consultation with established debt counsellors and the National Credit Regulator (hereinafter called “the NCR”), at various work stream sessions, arrived at a set of suggested rules and procedures which should be employed in order to streamline the debt review and restructuring process.

In order to share the outcomes of the work streams with all debt counsellors and to address the operational difficulties of the Act, the credit industry and the NCR have agreed to fund and facilitate this supplementary training to registered counsellors.

The NCA was introduced by the Department of Trade and Industry to better regulate the credit industry and to protect the consumers.

In a nutshell, the Act makes provision for:

• Prohibition of unfair credit and credit marketing practises;
• Promotion of responsible credit granting;
• Prohibition of reckless credit granting;
• Provision for debt review and re-arrangement mechanisms in cases of over-indebtedness;
• Regulation of credit bureaus, credit providers and debt counsellors.

NCA introduced two important concepts into general South African credit:

1. Over Indebtedness
2. Reckless Lending