NATIONAL CREDIT REGULATOR Presentation to the Portfolio Committee

NATIONAL CREDIT REGULATOR Presentation to the Portfolio Committee on Trade & Industry By Ms Nomsa Motshegare, NCR CEO Date: 13. 10. 2015 NCR Annual Report 2014/2015 & First Quarter Performance Report 2015/2016

OVERVIEW OF PRESENTATION 1. NCR Strategic Objectives 2014/15 2. Regular engagements with regular with key stakeholders 3. Key Successes 4. Quarter (1) Report 2015/16 5. Financial Information 2

THE NCR STRATEGIC OBJECITVES FOR 2014/15 To promote increased access to credit through responsible credit granting: Ø Increased awareness of affordability assessment regulations. Ø Reduce cost of credit for consumers. To protect consumers from abuse and unfair practices in the consumer credit market and address over-indebtedness: Ø Conducted reckless lending investigations and issued compliance notices. To ensure effective implementation of the NCAA: Ø Continue to create awareness of the NCAA through workshops, multimedia awareness campaigns and outreach programmes. 3

REGULAR ENGAGEMENTS WITH KEY STAKEHOLDERS § Credit Industry Forum established and chaired by the NCR. Forum includes reps from BASA, MFSA, DC Associations, PDA Association, and Consumer reps; § Other regulators: SARB; FSB, NCC. § Joint meetings: NCT, NCC with Universities and PE Consumer Affairs Office; § Collaborative relationship with World Bank: To set up international standards for credit reporting; § NCR as a member of the African Consumer Protection Dialogue hosted a meeting jointly with FTC, Washington, US, with members, including the NCC and NCT. Purpose: to collaborate on matters of mutual interest in the area of consumer protection: information sharing, investigations, enforcement and capacity building; § Hosted a delegation from Ghana, Swaziland Tanzania. 4

KEY SUCCESSES 2014/15 Clean audit opinion: § No findings on compliance and supply chain management & No findings on performance information Investigations & Enforcement: § Satinsky’s R 699 vehicle scheme: 3 banks referred to the NCT – Absa, Nedbank, Standard Bank. § Over-charging of credit life insurance: Finbond Mutual Bank referred to the NCT § Reckless lending and extension of credit to child grant recipients: Moneyline Financial Services referred to the NCT. § Mis-selling of credit life insurance, including club fees in the cost of credit, reckless lending: JDG Trading Pty Ltd, and JDG Microlife Ltd, and Lewis Pty Ltd and Monarch Insurance Company Ltd. 5

KEY SUCCESSES 2014/15 Investigations & Enforcement § Reckless lending: Ubank and Capfin referred to the NCT § Refunds to consumers: R 176 million, affecting > 200 k consumers § 48 cases referred to the NCT: 17 cases finalised, R 3 million fines § 25 Compliance Notices issued § Illegal Adverts: Issued Compliance Notices; engaged with Editors of Newspapers and the South African Standards Authority Over-charging, obtaining judgments in incorrect jurisdictions: Bayport § Securitisation referred to the NCT. 6

KEY SUCCESSES 2014/15 RAIDS WERE CARRIED OUT IN THE FOLLOWING PROVINCES: § Gauteng: Pretoria, Kempton Park, Boksburg and Benoni – 27 entities raided § North West: Marikana and Rustenburg - 20 entities raided § Eastern Cape: East London, Stutterheim, King William’s Town, Ilitha and Ilengalitsha - 27 entities raided § Free State: Bloemfontein, Botshabelo, Odendaalsrus, Bothaville - 27 entities raided & Mpumalanga: Mbombela § § In raids above, 969 Bank cards, 2891 SASSA cards, 189 ID Books and cell phones were collected. 17 people were arrested, R 1. 4 million was seized cash by the SAPS and criminal cases were opened. 7

FIRST QUARTER PERFORMANCE REPORT QUARTER (1) REPORT 2015/16 8

QUARTER (1) REPORT 2015/16 Output 2015/16 Annual Target SO 1: To promote responsible credit granting Improve 9 workshops conducted compliance with on affordability assessment regulations. assessment regulations 9 provinces visited to monitor compliance and appropriate enforcement action taken where necessary. 9 1 st Quarter milestones Actual Achievement 1 workshop Achieved: 1 in North West 1 province Achieved: 1 in Gauteng

QUARTER (1) REPORT 2015/16 Output 1 st Quarter milestones SO 1: To promote responsible credit granting Increase Conduct 10 2 compliance with investigations and investigations regulations appropriate enforcement pertaining to total action taken where cost of credit necessary 10 2015/16 Annual Target Actual Achievement Exceeded 3 investigations were conducted

QUARTER (1) REPORT 2015/16 Output 2015/16 Annual Target 1 st Quarter milestones Actual Achievement SO 2: To protect consumers from abuse and unfair practice in the consumer credit market and address over-indebtedness Conduct reckless 20 credit providers 4 investigations Partially achieved lending investigated and 3 investigations were conducted investigations appropriate Reason for Variance and take enforcement action Delays/non co-operation by appropriate taken where credit providers in supplying enforcement necessary. required information. action where Corrective Action necessary. Issue credit providers with summons to provide the required information. 11

QUARTER (1) REPORT 2015/16 Output 1 st Quarter Actual Achievement milestones SO 3: To enhance the quality and accuracy of credit bureau information Increase 2 Credit bureau Draft terms of NA compliance by investigated and reference. The terms of reference credit bureaus enforcement were not drafted. in respect of action taken Reason for Variance consumer where necessary. Management took a credit decision not to appoint an information. external service provider due to budget constraints. Investigations were conducted internally. 12 2015/16 Annual Target

QUARTER (1) REPORT 2015/16 Output 2015/16 Annual Target 1 st Quarter milestones Actual Achievement SO 3: To enhance the quality and accuracy of credit bureau information Increase compliance by credit bureaus in respect of consumer credit information. 13 14 credit bureau audited reports reviewed and appropriate enforcement action taken where necessary. Review audit reports from credit bureaus. Achieved

QUARTER (1) REPORT 2015/16 Output 2015/16 Annual Target 1 st Quarter milestones SO 4: To improve NCR's operational effectiveness Improve operational 95% of uptime efficiency through availability of the IT automated processes. system. 14 Actual Achievement 95% of uptime Exceeded availability of the 98% uptime. IT system.

QUARTER (1) REPORT 2015/16 Output 2015/16 Annual Target 1 st Quarter Actual milestones Achievement SO 5: To ensure effective implementation of the National Credit Amendment Act (NCAA) Improve 40 workshops with 8 workshops with Exceeded awareness and relevant stakeholders and relevant 9 workshops were compliance. monitor compliance with stakeholders. conducted the NCAA. 30 of any of the following: 6 of any of the Exceeded Radio/TV/Interviews/ following Radio 10 interviews News print. / TV interviews/ conducted News print. 15

QUARTER (1) REPORT 2015/16 Output Performance Measure or Indicator 2015/16 Annual Target Actual Achievem ent SO 5: To ensure effective implementation of the National Credit Amendment Act (NCAA) Improve awareness and compliance Number of outreach programmes and exhibitions (mall activations/ outside broadcast/ road shows/ Imbizos) conducted. 8 of any of the 2 of any of the Achieved following activities: -exhibitions -mall activations -Outside Broadcast -Outside (OB)/ Broadcast (OB)/ -road shows/ Imbizos in peri-urban and rural peri-urban and areas. rural areas. 16 1 st Quarter milestones

QUARTER (1) REPORT 2015/16 Output Performance 2015/16 1 st Quarter Actual Measure or Annual Target milestones Achievement Indicator SO 5: To ensure effective implementation of the National Credit Amendment Act (NCAA) Conduct Number of raids Conduct raids in Planning and Achieved special conducted in three (3) information investigations number of provinces and gathering. and appropriate provinces and take appropriate enforcement action taken enforcement action where action taken necessary. where necessary. 17

FINANCIAL INFORMATION – ANNUAL REPORT Total Income Expenditure 2014/15 (Actual) R 2013/14 (Actual) R 103, 298, 980 115, 886, 044 94, 977, 538 (121, 739, 257) (113, 632, 691) (121, 020, 045) Surplus/(Deficit) for the year incl non-cash items (14, 122, 499) Capital Expenditure 4, 317, 778 Total Assets 58, 994, 538 Total liabilities (48, 445, 818) Net asset value 10, 548, 720 18 2014/15 (Budget) R 2, 253, 353 4, 314, 924 (26, 042, 507) 5, 949, 118 - 64, 023, 032 - (39, 351, 813) - 24, 671, 219

FINANCIAL PERFORMANCE QUARTER (1) 2015/16 Actual Budget Variance ANNUAL BUDGET Apr - Jun 2015 Fees from registrants Apr - Jun 2015/2016 R R % R 5, 479, 320 7, 023, 965 -22% 55, 051, 554 DTI Transfers 39, 436, 000 0% 65, 727, 000 Other Income 751, 334 764, 061 -2% 3, 000 45, 666, 654 47, 224, 026 -3% 123, 778, 554 15, 346, 933 15, 175, 824 -1% 78, 781, 124 Programme costs 3, 250, 887 3, 182, 718 -2% 22, 213, 041 Administrative costs 4, 660, 325 3, 546, 261 -31% 17, 684, 850 23, 258, 145 21, 904, 803 -6% 118, 679, 015 TOTAL INCOME Personnel costs OPERATING EXPENDITURE incl non-cash CAPITAL EXPENDITURE 19 1, 851, 594 5, 099, 539 64% 5, 099, 539

Thank You! www. ncr. org. za 20