Cosatu puts its weight behind bill to aid overindebted consumers
Cosatu has come out in strong support for a proposed bill to provide debt relief for the overindebted.
The draft bill — the National Credit Amendment Bill — has been introduced by Parliament’s portfolio committee on trade and industry which is holding public hearings on the proposals.
The banking sector is opposed to the proposals, saying that individual banks have their own effective debt relief measures and that a blanket approach will have negative consequences for the sector and result in a restriction of credit extension to low-income groups.
These concerns were reiterated by Standard Bank’s head of credit risk in personal and business banking, Thabani Ndwandwe, on Friday during the public hearings. He argued for a reform of existing debt intervention mechanisms and stronger enforcement.
The group targeted for debt relief by the bill are those earning a gross monthly income of not more than R7,500 who have no readily realisable assets (excluding exempted items mentioned in the bill), are not subject to debt review and have debt of less than R50,000.
The bill would give the National Consumer Tribunal the power to forgive the debt of this target group in certain circumstances after a 24-month period. The tribunal would also have other debt relief options to apply.
Cosatu parliamentary officer Matthew Parks, who presented the federation’s views during the public hearings, said the bill had achieved the right balance between the interests of the banking sector and the needs of the overindebted.
"Cosatu strongly welcomes this progressive bill that will provide a desperately needed lifeline for thousands of highly impoverished and indebted workers and their families. We believe that it has been crafted in a way that is responsible, sustainable and constitutional as well as, most importantly, humane," he said.
A concern however was that the R50,000 loan cap proposed was too low as it would exclude the majority of student loans. Parks suggested that the cap not be applicable for education loans.
The labour federation also endorsed the provisions in the bill that would empower a special debt relief intervention by the trade and industry minister in regions and economic sectors that have experienced an economic calamity such as mass retrenchments in the mining sector or a natural disaster.
"This is progressive and vital to avoid the types of economic disasters we have seen in mining areas or rural areas where large numbers work for mines or areas of Cape Town and rural KwaZulu-Natal where thousands of clothing workers lost their jobs due to cheap imports or sugar farm workers losing jobs due to subsidised imports in KwaZulu-Natal and Mpumalanga."
Parks said Cosatu also supported the bill’s provisions to sanction reckless lenders. Loan sharks should be closed down, he said.