Here is our round-up of the most significant news within the industry this month …
Credit Bureau Monitor published
The NCR recently released their quarterly report (Q3 2016: July-September), reporting that there were 24.25 million consumers listed at the major credit bureaus. The report showed, once again, that the number of consumers with impaired credit records increased since the previous term, now standing at 40.6% of all credit-active consumers. However, on account level, the statistics show that the situation has stabilised in the last year. Our data suggests that, out of everyone with 3+ arrears as worst status on their report, each person has an average of two accounts that are 3+ months in arrears.
Retail market feeling the pressure
Consumers seem to be keeping a tight hold on their wallets – the question is whether they are simply feeling the effect of inflation or if the situation is so bad that they cannot afford to buy more or service their existing debt. Financial media recently reported that major SA retailers experienced a disappointing Festive Season, especially within the clothing category. Thus, Compuscan’s Q3 2016 data report indicated a 16% increase in the number of store cards that were listed 3+ months in arrears and a 12% increase in adverse enforcements on store cards.
Resellers to register as credit bureaus
With a looming deadline of 1 March 2017, time is running out for resellers, channel partners and on-sellers of consumer credit information to register as credit bureaus with the National Credit Regulator (NCR). This came after the NCR released a circular in October 2016, calling for all companies and individuals that meet the requirements of Section 43 of the NCA to respectively register as a credit bureau. Compuscan subscribers are urged to submit their proof of application to [email protected] by 28 February 2017 – should any parties not meet the NCR’s requirements by 1 March 2017, they will no longer be able to access Compuscan’s bureau data.
Legal update: MFSA vs DTI, NCR
Providers of short-term credit are waiting in anticipation to see what the next development in the case between Micro Finance South Africa, the National Credit Regulator and Minister of Trade and Industry will be. This tug-of-war commenced after the Minister of Trade and Industry published new Regulations that altered the rates and fees for short-term credit agreements. The new Regulations have had a major effect on lenders who argue that this could have a negative outcome for consumers. The reduction in rates and fees could cause a significant number of lenders to close their doors, crippling the unsecured lending market and causing substantial job losses. It could also potentially force consumers to approach unregulated lenders as the need for credit will continue to exist. In November 2016, the New regulations were set aside and the old Regulations were again of effect. Between December and January various applications for appeal were made, the latest being a special leave for appeal. The current status is that the New regulations were reinstated pending the outcome of the special leave to appeal.
RaaS to wreak havoc in 2017
Some are referred to as Shark, one is even called Satan. These new forms of Ransomeware-as-a-Service (RaaS) already have businesses in a flat spin as they need to revise their information security strategies for 2017. Cybercriminals have taken it to the next level as they now offer their ransomware for sale to others wanting to make a profit from holding victims’ files/data hostage. RaaS is now widely available and comes with easy-to-implement instructions that allow even those with limited coding experience to be able to launch a ransomware campaign. This will push the infection rate even higher with a bigger reach and destruction, calling for companies without comprehensive security solutions and multi-layered defence strategies to seriously consider their information security protocols.