News24 | BASA slams Parks Tau for withdrawing draft changes to National Credit Act

Parks Tau

• The banking industry body says amended regulations would have helped small businesses access credit.
• It claims Minister Parks Tau acted on “misinformed political pressure”.
• It also urged him to act with urgency to ensure the amended regulations are adopted.
• For more financial news, visit News24 Business.

The Banking Association SA (BASA) says the withdrawal of draft amendments to National Credit Act (NCA) regulations has compromised due process and the interests of small businesses on the basis of “known misinformation.”

Minister of Trade, Industry and Competition Parks Tau last week withdrew draft regulations changes to the National Credit Act following a public outcry. While some had argued the changes would allow educational institutions as originators of credit information, thereby allowing credit bureaus to access their historic debt information, BASA disputes this.

“The provision for credit bureaus to receive credit information from educational institutions has been in the NCA since 2006. It is not a new proposal and has not been introduced in the draft amendments,” BASA in a statement on Monday. “It is unfortunate that the minister and his department were seemingly not aware of the provisions in the legislation for which they are responsible.”

The withdrawn regulations were part of the National Credit Act amendment regulations that Tau published in a Government Gazette on 13 August. However, he withdrew them last week due after 20 000 submissions received before the closing date for public comments on 12 September, which showed widespread opposition to the proposed regulation changes.

In a statement issued by the Department of Trade, Industry and Competition (DTIC) on 12 September Tau argued that the response to the draft regulations “demonstrated the robust nature of SA’s democracy.”

However, BASA argues that the amendments were aimed at making it easier for small businesses to access finance and that the minister has gotten it wrong.

“Withdrawing the proposed amendments does nothing to protect the interests of students,” said BASA. “By withdrawing the proposed amendments, the minister has only succeeded in delaying and disrupting efforts to improve micro, small and medium enterprises access to financing.”

BASA argues that the proposed amendments to the NCA regulations would enable credit providers to tailor affordability assessments more appropriately to individual small and micro enterprises. The banking body also expressed its “great concern” that the minister withdrew the proposed amendments before the closing date for comments on the draft regulations.

“That the Minister chose not to wait to hear from those who might have made different submissions is not a reflection of the robust nature of SA’s democracy, but rather an indication of a disregard for proper, meaningful and legally required consultation, in the face of misplaced and misinformed political pressure,” said BASA. “This sets a dangerous precedent for current and future legislative processes in SA.”

The industry body also alleged that Tau’s decision had disrupted extensive work undertaken by a business-government partnership in support of small businesses, thereby underscoring concerns that government does not have a coherent, complementary economic policy, but rather a cluster of ministers and departments that act in their own short-term interests.

A 2024 report by FinScope found that there are approximately 3 million medium, small and micro-entrepreneurs in SA, employing around 13.4 million people. BASA says banks are committed to supporting these entities and that the amendments to the NCA — along with other necessary reforms — would enable banks and other credit providers to do more to help them.

“The NCA is now almost twenty years old and needs to be reviewed to better meet the needs of micro, small and medium enterprises, credit providers and South Africa’s developing economy,” BASA said. “Amending legislation to make it simpler, more relevant and practical is the best way to help micro, small and medium enterprises contribute to economic growth, without adding to bureaucracy and government initiatives for which there is no budget.”

“The proposed amendments to the NCA showed that good faith partnerships between government and business can produce beneficial outcomes for the economy and society,” BASA added. “Minister Tau should now move with urgency to ensure that they are adopted and not derailed by misinformation.”