CreditXpress COMPUSCAN NEWS RESOURCE
Our growth is your growth Debt repair agents and the NCA Columbus simplifies the search Industry update Project Evolution Make empowered business decisions with our Commercial Credit Information
Compuscan | 0861 51 41 31 | Fax : 021 413 2424 | www.compuscan.co.za 1
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Our Consumer and Business Credit Data
Biometrix/Signature Pads
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We offer integrated solutions for customer and employee identification and verification.
Accounts/repayment information Previous enquiries Identification and contactability information Public domain information Collections information Default/adverse information Fraud/SAFPS information Disputes information Debt restructuring information Commercial credit information Property information Director and company information
Marketing Services Identify the best target market with an acceptable credit profile to maximise the return on your marketing spend.
Xcelerator Automates credit application processing.
Credit Scoring and Analytical Consultancy Credit Bureau Solution We are uniquely placed to deliver an unrivaled credit bureau infrastructure solution in new markets.
We provide expert advice on scoring and predictive modelling to enhance decision-making and manage risk.
Bureau Summary Variables Credit Check A real-time online gateway to our extensive data via a user friendly graphical user interface.
A suite of automated decisioning variables which provides a 360° view of our data.
Employment Confidence Index CompuWatch A real-time alert service which monitors consumers’ movements in the credit industry.
Estimates the probability that a specific employer associated with a specific individual is the current one.
Income Predictor CompuScore ABC A suite of credit bureau scores which predict the probability of customer default throughout the credit life-cycle.
Codix/Codix Lite
Predicts the income of consumers and empowers business prospecting and customer management.
Account Verification Services Quickly and efficiently eliminate fraud by verifying the bank details of a consumer prior to making a pay-out.
Automated decision making tools.
Columbus/Trace Services Proloan A complete loan servicing, management, tracking and collections software platform.
Compuscan offers the technology to locate hard-to-find debtors both online via Columbus and in batch format.
Training Compuloan An advanced loan management system which provides a central database and a built in loan origination module.
Give your business the competitive edge by choosing Compuscan Academy to address your training needs.
For more information on our solutions and services, please contact us today. Telephone: 021 888 6000 | Email: info@compuscan.co.za | Website: www.compuscan.co.za 1
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>> MESSAGE FROM THE CEO It is hard to believe that we are already mid-way through the year. Over the past six months, Compuscan staff have been working around the clock developing and testing a range of innovative new products that we believe will be a major benefit the credit industry. Included in this is our Deeds and Director Data, Employment Confidence Index (ECI), Account Verification Service (AVS), updated and most accurate Income Predictor, over 4000 Bureau Summary Variables available online and in batch in same accuracy, integrated Commercial Credit Reports available online and batch and an advanced online tracing system, Columbus. As innovation is one of our core values we strive to constantly grow our business to meet the emerging needs of the industry and support our clients in their business growth. We hope that you are as excited as we are about the positive effect that these products will have, not only on your business, but on the industry as a whole. Please don’t hesitate to contact us for a demo of these new products. Once again, I would like to thank you for your support and assure you of our dedication to the continued growth of our business and to the continued support of yours. Warmest Regards, Remo Lenisa
>> IN THIS EDITION 02
INDUSTRY UPDATE - Project Evolution.
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E-LEARNING could take your business to new heights.
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DEBT REPAIR AGENTS and the NCA.
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IDENTITY THEFT - why this comedy is a tragedy.
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COLUMBUS simplifies the search.
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OUR GROWTH is your growth.
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CONSUMER CREDIT HEALTH in 2013 - are things looking up?
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LEGAL UPDATES on the CPA and Licensing of Business Bill.
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ONLINE LENDING - is it the way of the future?
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SOUTH AFRICA faced with higher levels of unemployment.
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MAKE EMPOWERED business decisions with our Commercial Credit Information.
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WHY CONSUMERS have a bigger salary but still less money.
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NCR IMPLEMENTS new guidelines and code changes to stamp out over-indebtedness.
>> CONTACT DETAILS ADDRESS: Compuscan House, 3 Neutron Avenue, Techno Park, Stellenbosch, 7600 NATIONAL NUMBER: 0861 51 41 31 TELEPHONE NUMBER: +27 21 888 6000 FAX NUMBER: +27 21 413 2424 EMAIL ADDRESS: info@compuscan.co.za WEBSITE: www.compuscan.co.za Compuscan is a registered credit bureau in terms of the National Credit Act (NCA). NCR NUMBER: NCRCB6 1
[INDUSTRY UPDATE]
PROJECT EVOLUTION
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s we realise the importance of remaining up-to-date with the latest industry news, we believe that it is in the best interest of your business to keep you informed about these developments. By remaining on cue with changes that will have an impact on the functioning of your business, you are afforded the opportunity to easily identify areas where the need exists for additional training, skills development, or simply to inform staff. One such industry development is the amalgamation of the National Loans Register (NLR) and Credit Providers Association (CPA) datasets into one integrated dataset. This project, known as Project Evolution, is currently in its pilot phase and is set to go live in September 2013. It thus has implications for those credit providers included in this phase. Post September 2013, all credit providers will be required to develop and submit their daily files (registration of new accounts and closures of existing accounts) and monthly files (payment performance data) in the new layout (L700 V2) via the CPA hub. Prior to September 2013, selected credit providers that are not involved with the pilot phase, will sign off testing on the return of credit report data to ensure that the data being returned is still correct. It is further required that the pilot phase credit providers’ data is cleaned before data submission takes place in the new layout. This data clean-up and migration to the CPA dataset will take place in two phases. The first phase commenced in April this year and the second is scheduled to be finalised by the end of July 2013. While this data clean-up is in progress, the rollout plan for the credit providers that are not part of the pilot group is to be developed. The migration of all NLR and CPA credit providers to L700 V2 layout will take place until November 2014. The final implementation date of the project is scheduled for the year 2016. Although the project will have an initial impact on data submissions, credit providers will still receive data
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in the original format until the project’s finalisation in 2016. The outcome of Project Evolution will not only affect the account types in that it will be one unified set of account types, but also the data submission frequency. Where it was previously only NLR accounts that were updated on a daily basis, registrations and closures relating to both datasets will need to be developed and submitted daily after the project goes live. Credit providers will be assured that the quality of data supplied at the source is improved and matches up to the assessment criteria. Furthermore, the project will ensure that the quality of data housed at all credit bureaus is also improved if and where necessary. By merging both groups’ datasets there will be unity in the form of a central source which will be of benefit when conducting affordability and risk assessments as consumers borrow from both NLR and CPA type credit providers. The combined datasets will also allow for greater efficiency and uniformity in terms of management. Yet another benefit of this project will be that the negative perception that is often incorrectly attached to the microlending industry will become increasingly positive as microlending institutions will be associated with the more established credit providers that form part of the CPA. The CPA confirms the expected benefits of the project in its statement that, “This project aims to deliver a unified payment performance dataset ensuring daily updates of new, closed and paid up records, while increasing the quality of monthly submissions by members thereby ensuring the delivery of inclusive, up-to-date, reliable and complete consumer data for risk decisioning and affordability assessment by members.” It is thus with anticipation that the credit industry can expect the official rollout of Project Evolution.
eLearning could take your business to new heights
The internet has taken the world by storm as its effects have rippled across the globe, drastically changing the way individuals and businesses operate. Since 2000, the number of internet users has grown by 870%, currently totalling more than 2.4 billion users globally. Not only has the web transformed the way that businesses interact with one another, but also the ways in which businesses are able to improve their internal operations, such as training. Traditional training methods, although of great value to the strength and growth of a company, are being substituted or supported by eLearning initiatives. According to international statistics, eLearning has taken first place as the fastest growing market in education. The United States of America and Europe are currently the global leaders in online learning as they, together, are responsible for the use of 70% of the world’s eLearning facilities, followed by Asia Pacific where the implementation of online learning is rapidly increasing. eLearning dates back to the year 1998 when it was first implemented, and is now a $56.2billion business which is estimated to double by the year 2015. The reason for this boom in online learning may be attributed to the numerous benefits that it has introduced for individuals and businesses alike. One of the most significant changes that the internet has introduced is the reduction in time taken to perform tasks – that which was once tedious and time-consuming can now be performed at the click of a button. Considering the rapid
pace at which business takes place nowadays, it is only beneficial for the employees of these companies to remain up-to-speed with training that is complementary to their role. Providing the most efficient way to do so, eLearning drastically reduces the time spent on the completion of training or educational programmes. According to statistics that highlight the benefits of eLearning, online classes are generally 25-60% shorter in duration than traditional classroom learning. This allows staff members that have embarked on training more time to fit classes in with their work schedule, making it possible for more people to be up-skilled. This boosts staff morale as they increase their knowledge and gain more confidence which in turn enables businesses to perform optimally and grow their profits. Besides the fact that saving time saves money, eLearning further saves money by reducing travel costs, facilitator costs as well as the costs involved with the supply of paperbased course material. It has been found that businesses save between 50-70% on costs by replacing traditional classroom learning with online learning. A further benefit for learners is that it has been proven that eLearning increases knowledge retention by 25-60%. This may be attributed to a number of factors such as the hands-on interaction with the learning material. Learners are also able to complete the session in their own time at their own pace without being targeted in class. This creates a more comfortable learning environment whereby learners are better able to absorb information. By
increasing knowledge retention, the investments that companies make on eLearning initiatives are more cost-effective and will have greater results as learners apply what they have learnt to their work. Although South Africa is not yet on par with the US, where a total of 77% of corporations make use of eLearning, we are nonetheless taking big steps forward in the implementation of eLearning opportunities. Compuscan Academy is no exception – towards the end of 2012, we introduced an online Learner Management System (LMS) which currently allows learners that are enrolled for learnerships to register and perform preassessments; access information about class dates, times, facilitators and venues; upload announcements and create forums to engage in discussions. The LMS which is heading towards a fully functional online learning environment will further allow learners to access course material and interact with the facilitator, improving their overall learning experience. Look out for the exciting developments that we are implementing as we endeavour to improve your learning experience and assist you to reach new heights in your business. Sources: • •
http://edcetera.rafter.com/wpcontent/uploads/2013/01/IBISCapital-eLearningFlyer.jpg http://elearningindustry.com/ important-statistics-about-theelearning-market-for-2013infographic
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s today’s consumers become increasingly credit savvy there is a heightened interest in how one goes about improving an unhealthy or incorrect credit record. Unfortunately, many consumers are unaware of the correct process to follow and find themselves susceptible to disreputable businesses who proclaim to offer assistance in this regard. While there are reputable debt repair agencies who can assist in providing consumers with advice or the rescindment of a judgment, there are also a vast number of businesses that hold themselves out to be debt repair agents and charge a fee for assisting a consumer to update their credit record at a credit bureau. These agents frequently either promise to remove information from a consumer’s profile which may not be removed or charge fees for updating a consumer’s profile, a service which is offered free of charge by a credit bureau. Neither the National Credit Act (NCA) nor other legislation regulates these agents and it has been reported that some require upfront payment and then disappear without assisting the consumer. In terms of the NCA, credit bureaus have a duty to assist consumers free of charge to update their credit profile should it contain inaccurate information. In this regard a consumer can either log a dispute (where the information on the consumer’s profile does not belong to the consumer) or a query (where the information is outdated or incorrect) and the bureau must resolve the issue within 20 business days. If the information on the consumer’s profile is correct, the NCA requires that the information be retained on the consumer’s profile for the prescribed period and it cannot be removed prior to the lapsing of the retention date. For example, if a consumer has a judgment against their name, that judgment (regardless of whether it has been paid up or not) will remain on the consumer’s profile for the prescribed period of five years. Thus, a consumer cannot pay an agent to have this information cleared. The only way to remove the judgment from the consumer’s profile is to have the judgment rescinded. Should a consumer wish to go this route there are various reputable debt repair or credit repair agencies that offer this service at a reasonable fee. Just as they can assist with the rescindment of a judgment, there are other instances where a debt or credit repair agent can assist consumers. Another such instance is where the agent acts in an advisory role during the debt counselling process. Compuscan therefore recommends that should a consumer have a dispute or enquiry regarding their credit report that they contact Compuscan’s consumer care department on 0861 51 41 31 or makes use of a reputable debt repair company for assistance.
About the Writer: Annelene Dippenaar is an admitted attorney, practicing since 2006. She has advised various clients, including registered banks, credit providers and other listed companies on the National Credit Act 34 of 2005. Since 2010 she has been employed by Compuscan, a registered credit bureau, as legal advisor and compliance officer. Annelene obtained a BA. (Law), LLB and LLM at the University of Stellenbosch and is currently writing her doctors thesis.
4 Years. 4 Developers. 30 000 Man hours.
INTRODUCING COMPULOAN Compuscan’s revolutionary debtor management system Contact us today for more information
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n Hollywood’s recent blockbuster Identity Thief housewife, Diana, steals the identity of businessman, Sandy Patterson, and goes on a shopping spree at Sandy’s expense. Later, when Sandy realises that his credit record has been ruined and an arrest warrant has been issued in his name, he takes matters into his own hands to track down the culprit. While Identity Thief may have grossed more than $36 million in its opening weekend, in real life the matter has been estimated to cost the South African economy more than R1 billion a year.
She’s having the time of his life is the slogan aptly given to the movie and highlights the threat facing consumers who find themselves in this position. In the United Kingdom (UK) CIFAS (the UK’s Fraud Prevention Services) released statistics showing that the fraud people fear the most is impersonation. When asked which type of fraud they were the most afraid of falling victim to 69% of respondents selected identity theft with only 21% stating that having money taken from a bank account was their greatest fear and 10% indicated that being conned into using their bank account fraudulently worried them most. These statistics indicate that identity theft is an internationally concerning problem and does not only affect South Africans. Carol McLoughlin, Executive Director of the Southern African Fraud Prevention Services (SAFPS), stated in a recent press release that “Being a victim of identity theft leaves not only financial repercussions but also a strong feeling of personal violation”. The press release went on to say that the SAFPS’ current database contains in excess of 37 000 fraudsters and more than 9 000 records of innocent individuals who have been victims of identity theft. Ultimately, 23% of all cases of fraud filed at the SAFPS were the result of impersonation. Statistics also indicate that the number of cases of impersonation filed with the SAFPS are on a steady increase. In January 2011, the total number of records of victims of impersonation stood on 3 054. By December 2012, this number had increased to 8 777 – almost a 300% increase. In South Africa, combating identity theft has become high priority for businesses and the government alike. The South African Social Security Agency (SASSA) recently implemented a voice recognition system to verify the identity of individuals before paying out social security grants. Likewise businesses, in particular those in the financial industry, are realising the importance of implementing sound fraud prevention strategies and advanced identification solutions.
Image - Advertisement for the movie “Identity Thief”
Another important tool in the fight against identity theft is education. In the movie Identity Thief, Sandy willingly gives his personal information over the phone during what seems like a legitimate phone call. Although most South Africans are already more financially savvy than Sandy, as fraudsters constantly advance their techniques and grow their skill set it is essential that consumers remain vigilant. By equipping themselves with information on how to protect their identity consumers can lessen the chances of becoming a fraud victim. The SAFPS as well as the South African Banking Risk Information Centre (SABRIC) recommend the following tips to help consumers protect themselves from ending up in Sandy’s position: 1. Shred all documents that contain personal information and do not throw anything away that someone could use to impersonate you. 2. Always remain attentive at ATMS and ensure no-one is attempting to get your pin number. 3. Make sure all your accounts have strong passwords that are not easy to decipher. 4. Do not carry unnecessary identification documentation such as your passport or identity book. 5. Whenever you receive a call from an unknown individual who requests personal information rather offer to call them back and verify that the number they have given you in fact belongs to the correct company. Also, rather ask them to give you the personal information that they have on record and you will confirm it instead of providing the details yourself. For more information on our SAFPS fraud data call us today on 021 888 6000. SAFPS can be contacted on 011 867 2234 or e-mail safps@safps.org.za 5
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Columbus simplifies the search Find a missing debtor as easily as finding someone on facebook In today’s world the term “search” has become part of everyday life. When trying to locate a restaurant, one simply has to type the name into Google to not only find its address but also directions on how to get there. When looking for a high school friend one only has to type their name into Facebook to be reconnected. Now imagine a world where locating a missing debtor could be as simple. Where one could simply enter an individual’s name, click search, and receive an array of contact and personal information helping you to locate the individual in the credit environment. Imagine this system was so advanced that it also identified the individual’s connections to others and then provided the tracing information of these individuals too. With Compuscan’s latest tracing system, Columbus, you don’t have to imagine. Columbus is the culmination of advanced technology, expert skill, a desire for innovation and most importantly – an understanding of customer needs. As a full service credit bureau, Compuscan seeks not only to provide its client’s with the latest, up-to-date and accurate data, but also to transform this data into intelligence so that it can be utilised within their business to address their most pertinent business challenges and transform the way in which business is conducted. Locating a missing debtor is one such business challenge. Acquiring the data necessary to locate an individual can be costly, time-consuming and often unproductive. However, to not invest this time and effort could result in one never reclaiming the debt owed. To address this, Compuscan created Columbus – a real time system that eliminates the timely process associated with locating an individual while still returning accurate and comprehensive tracing information. With Columbus you can easily search for an individual and instantly receive all of
their listed personal and contact details. Furthermore, it requires minimal user input to return search results. The details returned in the search are comprehensive and include all past and current contact numbers, residential addresses, employment details, spouse details, deceased information, director information and property information. Director information will provide you with details on all companies where an individual is a director and property information will provide information on all properties owned by the individual as well as in-depth bond information. Perhaps the most unique and useful feature of the system is the fact that it does not limit the search to the results and contact information of the individual you have searched, but also identifies other people connected to the individual and includes their information in the results. Thus, even if you are unable to contact the individual directly you are provided with a number of contact details for those who may be able to provide you with the information you need to locate the individual. The system also provides users with a Watch List for instances where you are not immediately able to trace someone. This includes an on-going monitoring function which will alert you when additional contact information is uploaded on the system. In this way you will always receive the latest information on the individual you are tracing. Users who are subscribed to Compuscan’s bureau data can also conduct bureau enquiries through the system which provides further insight into an individual’s behaviour. This ultimately provides an all-encompassing solution for locating debtors and puts the power back in your hands to locate even the most hard-to-find individual, quickly and efficiently.
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As innovation is one of our core values, we at Compuscan, continuously look for new opportunities to improve our product and service offerings. This drive for innovation, coupled with our advanced technological skills, ensures that we are able to identify your requirements and translate them into new products and services which will elevate your business’ performance. Over the past few months, Compuscan has been a hive of activity as we have been doing just this by developing and testing a range of new products that we hope will help your business reach new heights. The importance of conducting a thorough affordability assessment in today’s economy cannot be underestimated. The high rate of retrenchments coupled with the increase in incidents of fraud means that credit providers need to be all the more thorough when assessing a consumer. Determining stable employment is a vital part of this assessment and often involves the lengthily process of contacting the employer to verify the information submitted by the consumer. To make this process more efficient, we have developed an Employment Confidence Index (ECI) which provides you with the percentage chance that the specific employer associated with an individual is the current one. A high percentage associated with an employer will indicate a high certainty that an employer is the consumer’s current one. At the time of making a loan payment to a consumer it is vital that credit providers verify the bank account details provided for payment in order to eliminate the potential for fraud. We now offer a quick and effective way to ensure verification with our new Account Verification Service (AVS). This is a web-based service which can easily be integrated into your current system. The identity number and bank account of the consumer are sent to participating banks who then process this and return a result. This provides confidence that the account number supplied by a consumer is the correct one.
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Another exciting new product is our Income Predictor, developed in conjunction with ScoreSharp. This tool can again be used to verify if the information supplied by the consumer during the application stage is in fact probable. Ultimately, the Income Predictor will be able to provide you with information such as the predicted income value of the consumer, the predicted income band and the confidence measure which indicates the level of confidence of the prediction. Not only can this information be used in the acquisition stage but also in the prospecting stage to determine a consumer’s affordability regarding a specific loan product. It can also be used for up-sell purposes when a consumer’s income changes and to eliminate fraud should a consumer supply an unrealistic income value. Ultimately, this tool can support your decisions across the entire credit life-cycle. Compuscan’s bureau summary variables are not as new to the market as the products mentioned above, but their impact on the industry makes them worthy of being highlighted. This offering includes a suite of automated decisioning variables derived from a wealth of data sources which will unlock the key predictive information embedded in Compuscan’s raw data. These variables will provide a 360° view of your customers by quantifying exposure and behaviour across a comprehensive range of vertical markets. Available in batch or online, over 4000 summary variables are generated across 30 vertical markets. They can also be run retrospectively in an offline environment to enable scorecard development. Another product that will be familiar to many has spent over 30 000 hours in development to ensure it is one of the most advanced debtor management systems on the market. Compuloan, one of our flagship products, provides a central database and a built-in loan origination module to manage agreements. It also offers superior National Credit Act (NCA) support, customised reporting features and an array of other notable functionalities which support the entire loan cycle.
This year we also aim to revolutionise the debt collecting and tracing process with our online tracing system, Columbus. This powerful online tracing tool makes use of the latest tracing technology to search an extensive connections network to track and locate missing debtors. If a debtor is not immediately located the system provides a Watch List which performs an on-going monitoring function. You will then be alerted when additional contact information is uploaded on the system. As a Credit Check subscriber, you can also perform bureau enquiries and the system will maintain a record of all your previous searches. We are also proud to announce that our already impressive data offerings have been expanded to include Commercial Credit Information. Our Commercial Credit Reports give insight into the credit status of all companies registered at the Companies and Intellectual Property Commission (CIPC) and include comprehensive company details, principal information, a company credit score, auditor information and company property information. In addition, all businesses associated with the principal members of a company will also be included. As the world continues to move into a digital realm there is an increased need to create a more efficient paperless environment. Realising this need we have recently introduced advanced electronic signature pads which can be used to sign documents. This eliminates the need to use a pen and paper when customers sign contracts and allows for a more convenient electronic management of paperwork and easier filing thereof. These products are true testament to our commitment to meeting the growing needs of the credit industry. It is our mission to constantly evolve, with our clients, to ensure that we continue to provide the support necessary for their business growth.
Compuscan Academy Compuscan Academy is a skills development and training provider that delivers accredited, generic or customised training services to the corporate and credit industries. We have a wide variety of training programmes which can be customised to your business and training needs.
We look forward to seeing the positive effect these products will have on your business. 9
The continued increase in unsecured lending and the increase in credit utilisation showed that consumers were increasingly turning to credit to meet their needs and, ultimately, still under financial stress.
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ith the number of consumers with impaired credit records rising to 9.34 million in the fourth quarter of 2012, many are wondering if the next few months will point to signs of financial recovery amongst consumers or rather see their credit woes worsen. Following a year of soaring prices, mass retrenchments and increased delinquencies, there is no doubt that consumers are still under financial pressure. However, halfway into 2013, the exact state of consumer credit health is again a topical issue. Unfortunately, it does not appear as though consumers are out of the woods just yet. Early on in 2012 there were signs of consumer distress. Throughout the first and second quarters of the year there was a definite increase in credit delinquencies which indicated that consumers were struggling to meet their obligations. In addition, credit enquiries increased initially last year showing a heightened interest in credit acquisition. While these trends pointed to the fact that consumers were under financial strain, in the third quarter of the year a shift in consumer behaviour was seen. A reduction in credit enquiries and delinquencies in the third quarter of 2012 may have indicated that consumer credit health was stabilising, however other trends painted a different picture.
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While an increase in credit utilisation is a less concerning trend than increased delinquencies, unfortunately when it is coupled with the current economic climate, it may lead to consumers being placed under increased financial pressure, which ultimately may lead to further delinquencies down the line. In February 2013, Stats South Africa released statistics in their quarterly Labour Force Survey which showed that 68 000 jobs were lost in the fourth quarter of 2012. Furthermore, Adcorp estimates that a further 40 000 jobs were lost in January 2013. Unfortunately, as job losses continue to impact consumers, increased credit utilisation can become unsustainable and lead to a very unstable structure. Statistics included in Compuscan’s quarterly Synoptic Report highlight the increase in credit utilisation and show that there has been an increase in the number of revolving credit facilities in the higher balance categories. Overall, limits of revolving loans increased consistently by 50% for the last two quarters of 2012 and this is expected to continue into 2013. In particular, the number of revolving loans with a value of R100 000 and over increased by 50% in the fourth quarter of 2012. There has also been a consistent increase in the number of credit cards and store cards with a limit of between R25 000 and R40 000 and of R40 000 and over. Furthermore, there has been a consistent decrease in the number of credit cards with a limit of R5 000 and under which supports the trend that consumers are consistently applying for higher credit limits as a result of increased financial pressure. In the recent budget speech, Finance Minister Pravin Gordhan proposed income tax relief of R7 billion in the 2013-2014 tax year in a bid to ease consumer’s financial woes. However, it is unlikely that this will bring much relief to already cash strapped consumers who are being faced with other pressures such as increased fuel and electricity prices. Unfortunately, with a debt to income ratio of 76%, most consumers do not only have to worry about everyday expenses such as fuel and electricity, but also about their credit repayments.
CONSUMER PROTECTION ACT: ADVERTISER INDUSTRY CODE The National Consumer Commission published a notice calling for comment on a proposed industry code and ombudsman scheme for the advertising industry. The code is published in terms of Section 82(3)(a) of the Consumer Protection Act 68 of 2008 and will govern advertising in South Africa.
As such they are highly vulnerable to sudden price increases and to other changes such as interest rate hikes. While an interest rate hike may be seen as an effective way to control borrowing the pressure it will exert on those who are already overextended, coupled with increasing job losses makes this an unattractive option in the current economic climate. That said, should interest rates increase in the near future we can expect to see increased delinquencies. Given the current financial stressors facing consumers it is expected that lenders will continue to tighten their lending policies as they did last year. Credit agency Standard and Poors (S&P) recently released their banking outlook for 2013 titled “The South African Banking Outlook 2013: Uncertainties at home, opportunities abroad” wherein they state that loan growth for South African banks will be modest with the majority of growth coming from unsecured lending.” The report also goes on to say that major banks will slow unsecured credit extension toward the middle of 2013 or reduce term and tenor appetite. Furthermore, the report predicts that when this does happen nonperforming loans in this area will increase. All of the above signal that 2013 may be a very turbulent year for the credit industry and that now, more than ever, it is vital that lenders have proper measures in place and tools at their disposal to make accurate lending decisions. At Compuscan, we will endeavour to continuously bring you the most advanced credit management solutions to support your business regardless of what the remainder of 2013 holds.
The Code, amongst others, deals with direct marketing and contains a requirement to comply with the eight principles of the Protection of Personal Information Bill. Amongst others, marketers must inform consumers, upon request, who the source of the consumer’s personal information is. Furthermore, the Code requires all direct marketers to use the Direct Marketing Association’s (DMA) opt-out list until such a time as government has created the official opt-out list as provided for in the Consumer Protection Act (CPA). It is imperative that businesses who operate in the advertising sphere take note of the Code and adhere thereto once implemented.
THE LICENSING OF BUSINESS BILL On 18 March 2013 the Minister of Trade and Industry published the Licensing of Businesses Bill for public comment. The Bill requires that all formal and informal businesses in South Africa require a license, to be issued by the municipality in which it is situated, in order to conduct business. Any person who carries on a business without the required license will be guilty of an offence and liable to a fine or imprisonment or both. Police officers, traffic officers and other officers will be empowered to be license inspectors, with extensive powers of search, seizure and issuing of fines. The municipality is required to keep a database of information on every business licensed by that municipality. Municipalities are granted vast powers and are empowered to “make by-laws regarding licensing of businesses in any substantive or procedural matters connected therewith”. This means that the requirements in the Bill may become even more onerous. Comments on the Bill closed on 17 April 2013.
Author: Annelene Dippenaar
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ONLINE LENDING is it the way of the future? South African consumers are becoming increasingly demanding, expecting to get what they want quickly, efficiently, cheaply and often digitally. According to a survey performed by the Digital Media and Marketing Association (DMMA) in February 2013, 52% of individuals surveyed said they had shopped online in the past year. As internet connectivity continues to increase these figures are expected to rise with many South African’s turning to the internet to meet their shopping needs, including shopping for credit.
The November 2012 Effective Measure statistics show that 70.16% of South African internet users use the internet for online banking. Likewise, online lending is fast becoming a preferred method of acquiring credit. Online lending is not a new term, however it is certainly one that has gained popularity in recent years with many credit providers choosing to operate solely in the online space. While it may seem like a futuristic concept, the benefits to both lenders and consumers are numerous. One of the main reasons consumers turn to the online environment for their shopping needs is to save time. Despite the fact that decisioning tools and automated credit processing systems have resulted in most credit providers offering quick and efficient service, nothing beats the ability to apply for a loan in the comfort of one’s home at any time of the day. In today’s fast-paced environment, consumers are looking for around-the-clock convenience and shopping online caters to this need. Another reason online loans have become so popular in today’s society is the result of the human ego. For many consumers, applying for a loan is an admittance of failure. It is an admittance that they cannot make their monthly commitments, that they do not earn a sufficient salary and that they need financial assistance. With online lending anonymity is guaranteed. Consumers can apply for the loan from the comfort of their own home and eliminate the possibility of someone seeing them enter a credit provider’s branch. For credit providers online lending has a number of benefits. While the initial set-up may be costly, it can often serve as an invaluable tool for those looking to expand their customer base. With online lending credit providers can drastically expand their reach as borrowers are served entirely online and thus demographics no longer become an issue. A credit provider based in Johannesburg can serve a consumer in George. Furthermore, while initially offering credit online could serve to supplement one’s current lending branches, over time a move to operate entirely in the online lending sphere could offer massive savings in staffing and office space. Despite these numerous benefits, lending in the online space is challenging. The internet has drastically changed the competitive landscape making it easier for borrowers 12
to compare products, pricing and services. If the product and service you are offering does not match up to that of competitors, consumers will simply leave your website in search for an offer that better appeals to them. Unlike a physical branch structure, there is no time to persuade the customer to stay or offer him a better deal. Furthermore, your website needs to be eye-catching and user-friendly to capture the consumer’s attention and ensure they remain on your website. If it is difficult to navigate, unclear or unattractive the consumer will leave. It takes but one click for a consumer to leave your website. Just as with service delivery offline, online consumers no longer want or expect satisfactory service levels, they expect and demand that those they purchase from go above and beyond to meet their needs. Consumers who apply for credit online do not just want easy access to a loan application, they want to be able to compare products and rates, calculate monthly repayments, get personalised interest rates, track their loan status in real time and most of all feel like they are receiving fast and efficient service. There are many businesses competing in the online lending space and if a credit provider does not offer the best product in the most efficient manner they will lose their customers. Taking all of this into account online lending is certainly not the solution for all credit providers. Those that rely on the centrality of their location and the community in which they operate for business will lose this personal element in the online space. Being the only credit provider in your community or being known on a first name basis with your customers are marketing tools that cannot be replaced with a website. Ultimately, the lending landscape may dramatically change in the future as many credit providers turn to offer their loans in interesting and innovative ways. The concept of the brick-and-mortar branch may become obsolete or may look more like a social internet café than a financial institution. Business hours may change from eight to five to twenty-four hours. However, the key to success for credit providers is not to simply follow the herd and do what others do, but rather to make themselves aware of the changing credit landscape and then decide how they will best cement their position within it.
South Africa faced with higher levels of unemployment In the fourth quarter of 2012, approximately one third of the South African youth between the ages of 15 and 24 were not in employment, education or training (NEET). Of this group, 54.9% were women and 45.1% were men. In total, approximately 3.3 million youth were NEET, according to statistics released by Stats SA, highlighting the challenges faced by the youth of our country in the labour market. This critical age group forms the upcoming foundation of South Africa’s workforce and thus, for the sake of the economy and the upliftment of society, it is essential that this gap where employment, education and training are lacking is closed. As it stands, South Africa has recently had a decrease in labour force. According to the Quarterly Labour Force Survey (QLFS), also conducted by Stats SA, there was a decrease of 235 000 people between the third and fourth quarters of 2012, taking into consideration those between the ages of 15 to 64. The total South African labour force thus stood at 18.078 million, from 18.313 million in the third quarter. This reflects that the problem of unemployment is not limited to youth entering the workforce and remains a concern for the youth and those above the age of 24. According to Stats SA, the decrease in employment was due to a decrease of 52 000 jobs in the formal sector and 8 000 in private households. Of the 33.128 million people in the 15-64 year age group that formed part of the QLFS, the number of discouraged work-seekers averaged 2.3 million.
Faced with a somewhat dire situation in terms of employment, the need to equip people with the skills and knowledge to contribute to the workforce becomes all the more vital. By empowering people through education, they gain the confidence to build on their strengths and apply their abilities in the work space. In the 2013 Budget Speech, Finance Minister, Pravin Gordhan, addressed the fact that employment programmes allocations will increase by 13.5% per year over the next three years. This means that the R41.7 billion for 2012/13 will increase to R61 billion for 2015/16. The Budget also addressed the expanded public works programme which aims to support 684 800 full-time jobs in 2013/14. Whilst the government offers proposed solutions to reduce unemployment through increased budget allocations and the improvement of educational institutions, it is also important to contribute to the situation as individuals to the greatest possible extent. You may invest in your employability through education and initiatives that enable you to up-skill yourself. By doing this, you add value to your current company and to your profile. For those that find themselves in a position of unemployment, the chances of being hired increase with the enhancement of your skills and the improvement of your education. 13
Make empowered business decisions with our Commercial Credit Information Aristotle Onassis, prominent Greek shipping magnate, once said, “The secret of business is to know something that nobody else knows”. At Compuscan we share this sentiment and continuously seek to uplift our client’s businesses by equipping them with valuable knowledge and vital insights. It is our goal, not only to support our clients with the most advanced software and accurate data, but also to share knowledge essential for the expansion and strengthening of their business. Earlier this year, in line with this goal, we added property and director data to our already extensive database. It is our belief that the more information a business has at their disposal the more enlightened a decision they can make. This is particularly true for credit providers who need to establish the level of risk associated with a lending decision. However, when granting credit to a business, determining this risk can become increasingly complex. The financial position of the company’s directors, auditor information, associated businesses, properties owned and credit history all influence whether or not a business decision will be profitable. In order to facilitate access to the wealth of business data needed to make a sound lending decision, Compuscan has added comprehensive Commercial Credit Information to its hub of product offerings. The Commercial Credit Report provides an overview of key business information and gives insight into the credit status of all companies registered at the Companies and Intellectual Property Commission (CIPC). Our Commercial Credit Reports include definite and possible matches which enhance the likelihood of obtaining information on a particular company even if the subscriber has limited search details. If a definite match is found, the subscriber will be provided with the information available on the bureau database, including the company name and number, its registration date, start date, VAT number and status. The reports also contain extensive company information such as the company’s type, its financial year-end, its industrial classification as well as the number of authorised shares. Complete property and bond information is also included which provides greater insight into the financial stability of the company and its ability to manage larger financial commitments. 14
A company is only as strong as those at its helm and an integral element that needs to be examined when determining the risk associated with a business is the risk related to the principal members. Our Commercial Credit Reports contain comprehensive principal information and link to the principals’ complete credit reports to ensure you have access to vital information on those you are doing business with. A Company Credit Score is also given which reflects a combined score of all the active principals and gives an indication of the level of risk involved in terms of a company’s principal members. Many a business has met its demise as a result of poor associations. However, receiving full information on the businesses you are associating with is only the first step in protecting your business. To truly make an informed business decision and an enhanced risk assessment you also need to have an understanding of the network of companies associated with a particular business. Our Commercial Credit Reports ensure you have access to this complex array of information by providing details of associated companies connected to principal members such as company names, numbers, status, type, appointment date, principal contribution and status. Other information provided includes auditor information, which details the company’s affiliated auditors and includes the name of the auditor, their profession, their practice number, type and address, as well as their status, indicating whether the auditor has current connections with the company.
Furthermore, information on commercial judgments reduces exposure to risk by establishing whether the company you wish to enter into business with has had legal action taken against them as a result of non-payment. The Commercial Credit Report indicates whether the company has had any judgments issued and includes comprehensive information such as the court which issued the judgment and the reason that it was issued. By utilising the above information in a risk assessment prior to making a business decision, companies can ensure they have a better understanding of who they are partnering with, marketing to, buying from, selling to or associating with. By utilising our Commercial Credit Information providers, wholesalers and retailers that offer services or goods to businesses on credit can protect themselves from loss by reviewing a business’ credit history and credit providers who provide credit to consumers can determine the stability of an applicant’s employment by reviewing the commercial information of the applicant’s employer. Furthermore, rental agents can make use of our Commercial Credit Reports to determine a company’s payment behaviour and current credit commitments before leasing them a property. In addition, transport companies, banks and telecommunication companies can also enhance their decision making with the information provided in our commercial reports. In essence, our comprehensive Commercial Credit Information can provide business insight necessary for decision making in almost every business arena – a vital tool in today’s complex information age.
A preview of some of the data shown in our Commerical Credit Reports: PRINCIPAL BUREAU DATA PRINCIPAL NAME AND SURNAME
PRINCIPAL ID
CREDIT SCORE
FRAUD ALERTS
JUDGMENTS
ADVERSE ACCOUNTS
WRITTEN OFF ACCOUNTS
DEBT RESTRUCTURING
PROPERTIES OWNED
ACTIVE COMPANIES
ALEX MEMORY DUBE
666056021081
644 LOW RISK
NONE
0
0
0
0
4
1
JUST GOOFY
6507085223088
604 HIGH RISK
NONE
3
5
1
1
1
0
PRINCIPAL INFORMATION PRINCIPAL NAME
PRINCIPAL SURNAME
PRINCIPAL ID
PRINCIPAL TYPE
APPOINTMENT DATE
PRINCIPAL SIZE
PRINCIPAL CONTRIBUTION
STATUS
STATUS DATE
ALEX MEMORY
DUBE
666056021081
DIRECTOR
21/05/2006
50%
R40 000
ACTIVE
01/01/2000
JUST
GOOFY
6507085223088
MEMBER
04/01/2002
50%
R60 000
RESIGNED
10/10/2010
COMPANY SCORE
For more information on our Commercial Credit Reports contact Compuscan on 021 888 6127 or email info@compuscan.co.za
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For most consumers yearly salary increases no longer seem to make an impact to their financial wellbeing. As prices of electricity, petrol and consumable goods increase, modest salary increases make little difference to one’s financial position come the end of the month. Unfortunately, BANKSERV’s latest Disposable Salary Index (BDSI) shows that these are not the only reasons consumers seem to increasingly be left with less disposable income at monthend. The BDSI research shed light on why consumers’ salaries no longer seem to be sufficient. The Index highlighted that although salaries increase each year these increases are below the rate of inflation. The main cause for this is that although gross salaries increase above the rate of inflation, other deductions are resulting in the average person’s disposable salary growth not keeping abreast with inflation. Ultimately the research shows that in six of the last seven months the real disposable salary average has declined as a result of increases being below the rate of inflation. For the past seven months the BDSI has not increased with more than 6% on a year-onyear basis resulting in the longest period of increases below 6% in average disposable salaries since August 2005. As inflation sat at 5.9% in March 2013 it is clear that consumers will find little relief in a 6% increase. Interestingly the average consumer’s salary increased by 8.9% in the fourth quarter of 2012, but this is not a true reflection of growth in disposable salaries. While consumers may have received a salary increase over inflation, increases in a number of deductions are seeing their disposable salary increase with far less. Increases in tax, medical aid payments and pension contributions ultimately result in the consumer’s disposable salary not keeping up with inflation. 16
According to the BDSI report deductions weighing heavily on consumers include income tax, medical aid and unemployment insurance fund (UIF) contributions. Income tax grew by 9.6% which resulted in higher deductions, medical aid increased by almost 10% on a year-on-year basis and UIF deductions increased by over 20%. In addition, BANKSERV’s salary data shows that the average disposable salary for South Africans is between R6 000 and R7 000 per month for the first quarter of 2013. Furthermore, 36.3% earn above R10 000 and 32% under R4 000 and 32% between R4 000 and R10 000. This data is based on a sample size of just over 35% of all formal sector salaries. With many consumers falling in the lower salary bracket already feeling the financial pinch, salary increases appear to be offering little relief. Despite larger figures appearing on salary slips, less money is finding its way to consumers’ bank accounts. This may result in an increasing number of consumers turning to debt to bridge the gap and keep up with the ever-increasing living expenses. Unfortunately, this unsustainable structure could see consumers become increasingly poorer as their salaries become increasingly greater.
The number of consumers with impaired records increased by 95 000 to 9.34 million in the fourth quarter of 2012, from 9.25 million in the previous quarter ended September 2012, according to the National Credit Regulator’s Credit Bureau Monitor. This means that of the 19.97 million credit active consumers, 46.7% were three or more months in arrears. The startling percentage of consumers that are struggling to remain up-to-date with their credit repayments, points to the severity of over-indebtedness in South Africa. Although the National Credit Act (NCA) was implemented in order to suppress reckless lending and curb over-indebtedness, the National Credit Regulator (NCR) has recently expressed concern at the extent of over-indebtedness. For this reason, the Regulator has announced that it will be introducing affordability guidelines to be followed by all credit providers. A definite date has not yet been given as to when the guidelines will be introduced but the NCR has outlined the purpose of the guidelines. The NCA stipulates that an affordability assessment has to be carried out by a credit provider before the issuing of credit to a consumer. However, the NCA does not indicate the particular manner in which the affordability assessment has to be carried out. This has meant that not all credit providers’ assessments have been conducted as accurately as they should be due to numerous reasons, including consumers misstating their income or expenses or taking out multiple loans at various credit providers and the credit providers’ failure to check this, as well as the credit providers’ failure to check the consumer’s credit report before granting credit, according to Lesiba Mashapa, Company Secretary of the NCR.
In yet a further attempt to combat overindebtedness, the NCR announced, on 28 April 2013, the amendment of “the Credit Providers Code of Conduct to Combat Over-indebtedness, the Debt Counsellors Code of Conduct for Debt Review and the Payment Distribution Agencies Code of Conduct for Debt Review.” The NCR issued a statement to communicate that it has withdrawn “its recognition of the Debt Mediation Association (NDMA), the Credit Ombud and Debt Counsellors’ Association of South Africa (DCASA) regarding any roles they perform in the Codes and to remove them from the Codes.” According to Nomsa Motshegare, CEO of the NCR, the purpose of this change in credit industry codes is “to ensure that they are within the spirit and letter of the National Credit Act 34 of 2005.”
The announcement of the amended codes has sparked a mixed reaction in the industry. In response to the amendments, the NDMA has highlighted the fact that it remains a trusted mediation service provider and a respected institution in terms of consumer education. Also with the intention of curbing over-indebtedness, Cas Coovadia, managing director of the Banking Association of South Africa (BASA), stated in recent reports that the association plans to propose new rules by the end of May to manage unsecured lending and better control the risks associated with borrowing. Last year November, BASA and the National Treasury addressed the issue of the expansion of unsecured debt and it is as a result that the new rules have been proposed.
According to Lesiba Meshapa, “What the NCR wants do is to exercise full regulatory authority and oversight over the commitments made by credit providers to combat over-indebtedness and to lend responsibly.” The NCR thus plans on carrying out inspections and efforts to monitor whether, going forward, credit providers are keeping to these commitments.
The credit industry is set to undergo a significant amount of changes that may continue to evoke mixed feelings amongst operators in the industry and those who wish to obtain credit may find it increasingly difficult to do so. However, considering the magnitude of the problem our country is faced with in terms of consumer overindebtedness, finding a solution to improve individuals’ financial wellThe new amended codes came into being as well as the state of the effect as of 1 May 2013 and have country’s economy must remain the replaced the previous NCR approved highest priority. credit industry codes.
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ADVANCE YOUR SALES TECHNIQUES AND TAKE YOUR BUSINESS TO NEW HEIGHTS WITH COMPUSCAN ACADEMY Do you have the skills to identify customers’ needs, the ability to capture their attention and the confidence to promote your products in such a way that sales are made? Gain a competitive edge and improve your sales skills by refining your capacity to demonstrate the value of your products, accurately suggest solutions to meet your customers’ needs and express a positive attitude as the expert in your field. Sign up for our Sales Excellence Programme for Loan Consultants. For more information, please contact us on 021 888 6000 or email us at info@compuscanacademy.co.za. www.compuscanacademy.co.za 1
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