Share

Nearly half of SA's debt from top creditors 'appears reckless'

Some 40% of the credit provided by the country's top 10 credit providers appears to be reckless, a new survey has found.

The Reckless Lending Indicator, released by debt counselling firm DebtSafe for the first time, is based on data from the top 10 credit providers in South Africa for the period of April to July 2018.

Of 5 591 credit agreements investigated, 51% appeared not to be reckless, while 40% appeared to be reckless.

Of the remainder, 7% reflected agreements prior to the National Credit Act and 2% comprised other agreements.

"The analysed data of the top 10 credit providers, based on agreements that appear to be reckless, suggests that the 'big' credit providers are playing a major role in the reckless lending environment in South Africa," DebtSafe said in a statement.

These lenders include – in order – First National Bank (FNB) with 12% of the agreements that appeared to be reckless; Capitec with 6.5%, African Bank with 5.5%, FinChoice with 5.1%, Nedbank (MFC) with 5.0%; Absa and CapFin each with 4.7%; and Standard Bank with 4.2%. Last on the list are Nedbank (3.9%) and Old Mutual (3.9%). All remaining providers accounted for 44%.

The latest statistics released by the National Credit Regulator (NCR) in March 2018 indicate that SA has 25.46 million credit-active consumers. Meanwhile, 9.7m consumers – totalling 38% – have impaired credit records.

According to DebtSafe, this means "almost one in every 25 credit-active consumers that sit with an impaired credit record […] might be over-indebted".

Over-indebted in 3 clicks

"It is shocking and scary to know that consumers can pave their way to over-indebtedness with just three clicks using modern-day technology. These days it is all too ‘normal’ to not only apply for credit but to also get it approved within a few seconds. The concerning question here is: does the credit provider conduct a thorough affordability assessment to make sure that the consumer can keep up with the agreed upon payments?" DebtSafe said.

Matthys Potgieter, debt expert and spokesperson at DebtSafe, said, "Previously consumers went to creditors to ask for credit, but now things have changed, and instead, hard-selling credit comes directly from the creditor to the consumer."

According to Potgieter, consumers may be confronted with pre-approved loan applications via various mobile apps or other methods like SMS, email and telephone calls.

"Before consumers click 'accept' on such an application, I would like to ask them the following question, 'If you withdraw or use all this money on the same day, would you be able to afford the loan’s instalments in future?' and if they answer 'no!' – then they, with the click of the 'accept' button, will already be over-indebted," he said.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.93
+0.0%
Rand - Pound
23.90
+0.0%
Rand - Euro
20.40
+0.1%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.13
-0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
+1.3%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders