New credit process outlined
The implementation of the National Credit Act on Friday changed the process of applying for a credit facility.
The Banking Association outlines the process consumers will now follow when applying for credit:
l A customer requests a credit facility from a bank or retailer.
l Various details, in addition to the Fica documentation, need to be provided to the credit lender.
These include a statement of monthly income and costs, existing debts, household budget, marital status and race - requirements for statistical reasons.
Couples married in community of property will require the written consent of their spouses.
l An affordability assessment is conducted on the person requesting the credit.
l The credit lender will evaluate the customer's understanding of the costs and responsibilities around the credit agreement.
l The customer's ability to meet the repayments on time within their existing financial means will be assessed.
l The customer's debt repayment history will be assessed.
If the credit request is approved:
l The credit provider will compile a quotation for the customer.
l This quotation will include all associated charges, which are interest, initiation fees and service fees. Credit providers will disclose the pricing for each of these charges.
l The customer will then have a five-day period in which to consider the quotation, including obtaining competing quotations. The quotation must be accepted before the five-day period ends.
l If the consumer is comfortable with the quotation, the credit application will be processed immediately.
If the credit request is declined:
l Consumers will be able to request from credit providers, in writing, the main reason for the declining of the credit request.
l The act allows for borrowers to apply for a debt review through the National Credit Regulator. This review is conducted by a debt counsellor. Consumers are advised that such an application should be a last resort.
A consumer's future access to credit will be affected negatively once a formal application is made under the act for debt counselling.
The association says: "The new regulations require that customers remain totally honest about their details.
"The race of the credit requester also needs to be provided as the regulator is required to assess how the market is developing," the association says.