Credit watchdog let off hook in parliament

If people who lost billions in the collapse of African Bank expected the National Credit Regulator (NCR) to be thoroughly grilled in parliament on Friday, they would have been left bitterly disappointed.

The regulator is responsible for policing the granting of credit in South Africa. Although it fined African Bank R300-million last year in one incident, it has drawn flak for doing little to stem the flood of credit granted to people who couldn't pay.

But on Friday, when DA shadow deputy minister for trade and industry Dean Macpherson asked the NCR to what extent it had scrutinised the bank's affordability assessments, the chairwoman of the DTI parliamentary portfolio committee, Joan Fubbs, cut him short, saying he should "be responsible" given the sensitivities around African Bank.

Macpherson got little joy from the regulator during what was meant to be "an engagement with the NCR on matters relating to African Bank Investments Ltd (Abil)".

The Reserve Bank placed the bank in curatorship two weeks ago amidconcern about reckless lending and the need to minimise systemic risk.

The parliamentary "engagement", however, largely revolved around ANC MPs commending the regulator for its role in enabling low-income earners to get credit.

Macpherson was furious.

"For them to say the matter was 'sensitive' and that one spark could ignite things is unacceptable," he said. "It seems to me that the NCR does not think it has any responsibility in the issues that led to the curatorship of Abil. When did they know about Abil's problems and what did they do about it?"

Trade and Industry Minister Rob Davies, who is responsible for the NCR's performance, also seemed to brush off questions about the regulator's alleged inability to act effectively, saying it was not in the interests of low-income consumers "that we have reckless lending".

However, Macpherson said it was a disgrace that even when the regulator did act, imposing a R300-million fine on African Bank, the figure was negotiated down to R20-million.

But National Credit Regulator Nomsa Motshegare told parliament that African Bank's fine had been cut because Abil had cooperated - and it was the first time it had been charged with a contravention of the National Credit Act.

The bank had also agreed to write off about R16-million of the loans under investigation, and to rescind judgments.

Motshegare said the investigation had been prompted by complaints from consumers. The regulator had scrutinised altogether 669 reckless loans.

Zodwa Ntuli, deputy director-general of the DTI, told the committee that the regulator did not just police the industry; it also worked to educate consumers.

"Where they act is where they see a blatant disregard for the regulations," she said.

Ntuli said proposed amendments to the act, which are expected to be implemented before year-end, would strengthen the NCR's ability to deal with reckless lending.