24 April 2003
The South African Communist Party (SACP) is pleased at the public release of draft regulations governing Credit Bureaus in South Africa as released by Minister Alec Erwin. The SACP is particularly pleased the final regulations will come under the Unfair Business Practices Act and that they will be implemented by a representative liason committee and an ombudsman. This is in line with the agreement reached at the NEDLAC-hosted Financial Sector Summit held in August 2002. The draft regulations also follow the 2001 public investigation by the Department of Trade and Industry (DTI). The Credit Bureau Association (CBA) responded to this investigation with its own announcement of a Draft Code for the self-regulation of Credit Bureaus.
The draft regulations require credit bureaus to take responsibility for the accuracy of the information they store and provide. This also makes it possible for a consumer to dispute credit information in order that credit bureaus may correct information within five days of a complaint. The new regulations also propose that consumers may access their credit information without any charges. The new regulations also require that companies sending a negative credit rating to credit bureaus must inform consumers in writing within a month of this action. The SACP regards these draft provisions as significant steps forward. The SACP believes that the draft regulations move from a paradigm which emphasises access to credit for socio-economic development and meeting basic needs as a right for all consumers.
However, the SACP argues that the final regulations must be underpinned by the following:
As the experiences of millions of South Africans show, the 11 Credit Bureaux in our country have essentially blocked access to credit for socio-economic development for millions of people in our country. Financial service providers and other credit grantors almost exclusively rely on information provided by the Credit Bureaux. Therefore, any effective regulation of financial services must include effective regulation of the Credit Bureaux by the state.
The SACP calls on the DTI to ensure maximum public participation in the finalisation of the regulations through public hearings and sufficient time for comments by the public. The SACP calls on all South Africans, in particular those who have been victims of practices by Credit Bureaus, to make submissions on the draft regulations.
Currently, the 11 Credit Bureaus which exist in our country are a law unto themselves. They unilaterally collect information on the public, compile credit profiles and sell this information to credit grantors without any participation by those affected by these processes and decisions of credit grantors. Through this process many of our people are unfairly denied access to credit. Access to credit is crucial in the social and economic development of many communities in South Africa. By denying credit to those they unilaterally profile as un-creditworthy, the Credit Bureaus protect the interests of the credit grantors to maximise profits at the expense of under-development of our townships and rural areas.
As stated before, the SACP condemns this unilateral collection and distribution of personal information on individual consumers by Credit Bureaus. The SACP believes that this collection and distribution of personal information is not in line with the rights to privacy and confidentiality enshrined in our country's constitution transparency. An appropriate mechanism to collect credit information on consumers must include informed participation and consent by affected consumers.
CONTACT
Mazibuko K. Jara
Department of Media, Information and Publicity
South African Communist Party
Tel: 011 339 3621; Fax: 011 339 4244; Cell - 083 651 0271
Email: mazibuko@sacp.org.za