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Giving credit where it is due

MAYA FISHER-FRENCH | JOHANNESBURG, SOUTH AFRICA - Jul 30 2010 09:21

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The recession and job losses have wiped out many households financially. Over time we will see a recovery and most of the people affected will be back on a stronger financial footing.

But foreclosing on their homes, taking away cars and hitting them with penalties that will ensure that they never escape the debt trap is not the answer. Finding a middle ground where credit providers are repaid and customers can see the light at the end of the tunnel is about basic humanity and dignity.

While we as journalists have pointed out the problems with the National Credit Act ("unintended consequences" is the media’s favourite phrase), let me here give credit to the National Credit Regulator, which has taken action and put together a workable solution in dealing with the debt-counselling problem. (read Facing the debt crisis)

The fact that it has been able to get the banks, the debt counsellors and payment agencies to sit around a table and find a way to address our debt crisis is a remarkable achievement.

Many may complain that this is all too late; but let's take a step back. While the rest of the world, which sits with the carnage of a credit and banking crisis that ripped economies apart, only now acknowledges that it needs legislation that guides lending practices, South Africa has had the opportunity to stress test its already existing National Credit Act during the worst credit crisis in history.

We are at least ironing out our problems, not starting from scratch. To borrow a phrase from the National Treasury, we are "shovel-ready".

Have debt counsellors been a problem? Absolutely. Have some banks and credit providers acted in bad faith by out-litigating their already indebted clients? Absolutely. Have some unscrupulous people taken advantage of the system? Absolutely.

But what matters now is what we are doing about it.

If the National Debt Review Committee delivers on its objectives, I believe we will have a credit and debt rehabilitation environment that will be the envy of the world. If it fails, which it will if the partners do not stick to their side of the agreement, we will have an even greater crisis on our hands.

CONTINUES BELOW

This journalist will be watching the developments with a keen interest.

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