South Africans’ over-indebtedness has long been a political risk for the financial system. Almost 10-million have impaired credit records and millions more struggle to meet repayments. That is a sizable voting constituency. Cold political logic dictates that politicians can make short-term gains by appeasing that constituency, even at the risk of dire long-term consequences for the financial industry. And that is what is happening. It started in the run-up to the 2014 national election. Then, it was the credit information amnesty (done via regulations to the National Credit Act) that was rushed through parliament. The amnesty was a watered-down version of what had initially been proposed. The financial sector put up a spirited battle against more dangerous ideas including a debt amnesty, but ended up with regulations compelling credit bureaus to delete certain kinds of adverse credit information, making it easier for many to obtain new credit. Fast forward to 2019 and the stakes hav...

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