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By Donwald Pressly

Cape Town – Consumers are acting in a more discerning manner as a result of increases in the cost of living, “despite excessive and sometimes reckless marketing … in the run-up to the implementation of the National Credit Act”, according to the National Credit Regulator’s latest annual report, published last week.

Chief executive Gabriel Davel said feedback from credit providers indicated more discerning behaviour at all income levels. The National Credit Act came into effect in June last year.

Davel said the next 12 to 18 months would nevertheless be challenging for consumers and credit providers. The cost of living had increased dramatically, “with food, fuel and electricity prices increases all making a contribution”.

Increases in interest rates implied significantly higher debt servicing costs. “Increased debt stress is notable and further increases are inevitable over the coming months,” he predicted. “This poses a huge challenge to all the parties involved in consumer credit.”

Davel said 2 535 credit providers had been registered in the past year, representing 27 000 branches. The largest proportion comprised 11 110 branches of banks, or 41 percent of provider branches. The second-biggest category was microlenders with 5 500 branches, or 21 percent. There were 4 291 clothing retailer branches (16 percent) and 2 772 furniture store branches (10 percent).

He said 336 debt counsellors had been registered and had undergone training.

In terms of the act, a three-month period in which a consumer is safe from legal action is possible if the consumer is registered as being under debt review.

The National Credit Regulator polices local credit providers. It was established in June 2006. It broke even in the latest financial year, but this was largely due to a large state injection of funds and about R5 million in interest income on revenue, according to the financial statement in the annual report.

The report tabled in parliament shows that revenue rose from R37.3 million last year to R47.5 million. This was made up of fee revenue of R18 million from clients, government grants for operational activities totalling R27.3 million, government grants of R1.4 million to cover the costs of the national credit register, and R708 000 from elsewhere. R4.7 million in other revenue enabled the regulator to break even.

Expenses amounted to R52.3 million, up from R38.9 million. These included operating expenses of R18 million, compared with R14.5 million for the 10 months of operation in the previous year; staffing costs of R23 million, from R15.7 million; administrative expenses of R9.5 million, from R7 million; depreciation of R1.15 million, from R1.3 million; amortisation expense of R205 000, from R184 000; and finance costs of R10 578, from R1 964.

Auditor-general Terence Nombembe said that from the evidence he had obtained, it was sufficient and appropriate to report that no significant findings had been identified.

He said it was his opinion that the statements presented fairly the financial position of the regulator.