The National Credit Regulator (NCR) released the Consumer Credit Market Report (CCMR) and the Credit Bureau Monitor (CBM), which are based on data submitted by the registered credit providers and credit bureaus respectively. The latest edition of the reports covers credit market information from October 2022 to December 2022. The total value of new credit granted decreased by 2.67% quarter-on-quarter from R168.11 billion to R163.62 billion. The number of credit agreements entered into increased by 6.19% quarter-on-quarter from 4.10 million to 4.36 million.

The following were some of the most significant trends observed in terms of credit granted for the quarter ended December 2022:
• The value of new mortgages granted decreased by R5.07 billion (8.05%) quarter-on-quarter and by R4.82 billion (7.68%) year-on-year.
• Secured credit which is dominated by vehicle finance, increased by R2.46 billion (5.15%) quarter-on-quarter, but decreased by R554.94 million (1.10%) year-on-year.
• Credit facilities decreased by R1.13 billion (4.36%) quarter-on-quarter and increased by R893.83 million (3.76%) year-on year.
• Unsecured credit decreased by R1.32 billion (4.70%) quarter-on-quarter, and by R739.53 million (2.68%) year-on-year.
• Short-term credit increased by R296.32 million (13.28%) quarter-on-quarter and by R355.66 million (16.38%) year-on-year.

The total outstanding consumer credit balances (or gross debtors book) as at December 2022 was R2.26 trillion, representing an increase of 1.88% quarter-on- quarter and of 7.19% year-on-year. The trends for outstanding balances for the quarter ended December 2022 were as follows:
March 2023
• Mortgages debtors book increased by R18.36 billion (1.57%) quarter–on- quarter and by R78.78 billion (7.13%) year-on-year.
• Secured credit debtors book increased by R8.31 billion (1.71%) quarter-on- quarter and by R24.81 billion (5.29%) year-on-year.
• Credit facilities debtors book increased by R11.34 billion (3.87%) quarter- on-quarter and by R35.47 billion (13.20%) year-on-year.
• Unsecured credit debtors book increased by R3.28 billion (1.50%) quarter- on-quarter and by R11.60 billion (5.53%) year-on-year.
• Short-term credit debtors book increased by R267.21 million (13.61%) quarter-on-quarter and by R295.60 million (15.28%) year-on-year.
Credit bureaus held records for 26.90 million credit-active consumers, which was an increase of 0.95% when compared to the 26.65 million in the previous quarter. Consumers classified in good standing increased by 304,197 to 17.19 million. This amounts to 63.89% of the total number of credit-active consumers. The number of credit-active accounts increased from 86.77 million to 89.37 million in the quarter ended December 2022. The number of impaired accounts has decreased from 19.17 million (22.10%) to 19.09 million (21.36%) in December 2022, a decrease of 87 991 quarter-on-quarter and 458 062year-on-year.

The cycle of interest rates has been on an upward swing, consumers with payment obligations are under severe financial pressure because of increased payment towards their obligation. The NCR urges consumers to draft monthly budget to manage their expenses. For those consumers who are battling with their debt repayments, the NCR encourages them to contact their credit providers for assistance with payment re-arrangements. Consumers must not avoid credit providers when in distress. In the worst-case scenario, consumers are urged to contact their nearest registered debt counsellors to seek help. Debt counselling is intended to assist consumers who are over-indebted. Over-indebtedness is a state where the consumer ‘s income is not sufficient to cover all financial obligations and living expenses. A registered debt counsellor should be able to assist the consumer with budget advice and debt restructuring, says Nomsa Motshegare, the CEO at the NCR.

Comparisons in this release- ‘quarter-on-quarter’ refers to a comparison between the September 2022 and December 2022 quarters, and ‘year-on-year’ refers to a comparison between the December 2021 and December 2022 quarters.

Key among the FIC Act obligations is the requirement to develop and document a risk management and compliance programme (RMCP).
Section 42 of the FIC Act prescribes all the elements that must be covered in an accountable institution’s RMCP. The FIC Act requires accountable institutions to apply a risk-based approach as a preventive measure against money laundering, terrorist financing and proliferation financing (ML, TF and PF).

The RMCP document must set out the institution’s governance controls, the ML, TF, and PF risk assessments as well as aspects including a risk-rating framework, customer due diligence, targeted financial sanctions aimed at terrorist and proliferation financing, prominent influential person controls, account monitoring, reporting and record-keeping controls. The development and implementation of RMCPs are considered dynamic exercises as opposed to rule-based policies and procedures manuals.

Section 42 of the FIC Act was recently amended by the General Laws (Anti-Money Laundering and Combating of Terrorist Financing) Amendment Act, 2022 (Act 22 of 2022) (GLA Act). Included in the amendments is the requirement that RMCPs also provide for group-wide programmes for all of an accountable institution’s branches and majority-owned subsidiaries situated in South Africa. This includes how branches or subsidiaries will exchange information relating to customer due diligence and the analysis of transactions which may be suspicious or unusual in terms of section 29 of the FIC Act. The accountable institution must have adequate safeguards to protect the confidentiality of information exchanged.

The FIC published PCC 53 guides accountable institutions in enhancing their risk understanding and application through their RMCPs. In addition, PCC 53 offers guidance on how to adequately draft the RMCP document. Although PCC 53 is yet to be updated in line with the GLA Act, accountable institutions must ensure full compliance with the FIC Act as amended by the GLA Act. PCC 53 emphasises the importance of an accountable institution documenting its inherent ML, TF and PF risks, its understanding flowing from the risk assessment, and the risk mitigation measures, monitoring and management measures in the RMCP. The risk-based approach must provide for business-level, new products and processes, as well as client-level risk assessments.