May 30, 2017

Credit Bureau Information: What you should know

If you are a credit provider you will at some point have to delve into the financial history of a potential client to determine whether or not it would be a financially wise decision for you to enter into a business relationship with such consumer, or in the event of a company screening a prospective employee, whether it would be wise for you to enter into a working relationship with such person. However, before you embark on your delving expedition, it is important to take cognisance of the National Credit Act (“the Act”).

The purposes of the Act is to promote and advance the social and economic welfare of South Africans, promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and to protect consumers. One of the ways to achieve this is to improve consumer credit information and reporting and regulation of credit bureaux. In terms of Section 70(2)(g) of the Act, a registered credit bureau must issue a report to any person who requires it for a prescribed purpose or a purpose contemplated in the Act, which report may only be obtained with the necessary consent from the relevant consumer. This is the reason why service providers such as Searchworks, who gives you easy access to credit bureaux has an available list of “prescribed purposes” from which list you are required to make a selection indicating your purpose for the request. This list may include inter alia:

  • Credit Risk
  • Credit Limit Management
  • Insurance Application
  • Employment
  • Fraud, Corruption or Theft Investigation
  • Fraud Detection and Prevention
  • Setting limits for goods, utilities or services
  • Unclaimed funds distribution
  • Affordability / means assessment
  • Pre-screening
  • Credit information queries / disputes
  • Debt counselling
  • Personal credit report requested by consumer
  • Other – as per law

On 13 March 2015, Regulation 19 of the Regulations of the Act was amended by adding a few sub-regulations. Amongst these sub-regulations was sub-regulation 19(12) which can be summarised as follows:

 “A consumer credit record (which means records of debt repayment history), may not be accessed by a person within the employment context, unless the requester certifies that any and all requests for consumer credit records relate to a position requiring honesty in the dealing of cash or finances.”

Accordingly, any employer requesting a consumer’s credit record as part of its “screening process” must provide certification that the position applied for requires honesty in the handling of cash or finances. Unfortunately the Act does not define “cash or finances” and you as the employer, will therefore have to use your own discretion in determining whether the position applied for does in fact fall within the ambit of Regulation 19(12) of the Act to ensure that you do not overstep the boundaries set for you by the Act.

Author: Almie Fourie

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