Credit amnesty explained

Credit amnesty is a hot topic of late, especially since the Department of Trade and Industry published the ‘Removal of Adverse Consumer Information and Information Relating to Paid Up Judgement Regulation, 2014'.

Marelize Uys

Thursday, 22 May 2014


Clearly this is quite a complicated description and was bound to be misinterpreted by the general public and companies alike.

Marelize Uys, Chief Operations Officer (COO) at South Africa's leading background checking and verification business, Managed Integrity Evaluation (MIE), says there is mass confusion about credit amnesty. "Some people are going as far as to think their debt was going to be wiped clean. Obviously this is not the case. What this regulation does entail is the once off removal of adverse consumer credit information and paid up judgements, as well as a continuous removal of paid up judgements," says Uys.

What is a "paid up judgement"?

This is any contrary court judgements relating to debt where the consumer has settled the capital amounts. In other words, where the consumer has paid off their debt.

"What this means in terms of credit amnesty is that previously debt settlement was listed as ‘paid in full' for a certain period of time. Now it will not be listed at all, which is good for consumers who have dealt with previous debt," says Uys.

What does "adverse credit consumer information" mean?

Sometimes people with debt would be officially labelled as ‘delinquent', ‘slow paying', ‘absconded', or ‘not contactable', to name a few. These are usually subjective categorisations of consumer behaviours and do not always reflect the people themselves.

"With the new regulations, consumers will not have to live with these labels if they have in fact paid off their debt," says Uys.

How does this credit amnesty impact the credit bureaus?

Credit bureaus must ensure that they have removed all adverse consumer information pertaining to the terms of the credit amnesty. The adverse data may not be displayed or provided to any prospective employers requesting such information.

Does the credit amnesty mean that a consumer's debt is absolved?

The credit amnesty does not mean that consumer's credit obligation no longer exists. It rather means that certain adverse records regarding the manner in which the consumer previously managed their obligations will no longer be held on the records of the credit bureaus. "The credit amnesty seeks to create the incentive for consumers to repay their debt instead of naming and shaming people based on subjectivity," says Uys.

Can employers still conduct credit checks on prospective employees?

Yes, credit checks may be conducted within the recruitment process if the employer continues to abide by the regulations. In the background screening industry a credit check can be requested for one of the following purposes:

  • Employment in a position that requires trust and honesty and entails the handling of cash or finances
  • Verifying education qualifications and employment
  • Fraud detection and prevention services

How will the credit amnesty impact background screening companies like MIE?

It won't. Companies looking to vet prospective employees will still be provided with adverse judgements listed against a consumer for debts that have not been settled.

"Additionally, previous employment history, address history and ID verification will also reflect on credit reports," says Uys. "This includes new adverse credit information and new judgements as well. So companies need not worry about credit amnesty's impact on their vetting process."

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