A sub-committee of the Portfolio Committee on Trade and Industry dealing with debt relief today resolved to include a request for research that will look at the level of indebtedness of middle-income consumers earning more than R30 000 per month.

The sub-committee, chaired by Member of Parliament Mr Adrian Williams, agreed to include the proposal and others made by another Committee Member, Mr Dean Macpherson, as part of the terms of reference for the research to be done on a proposed Bill on debt relief that the Committee is considering.

The sub-committee was referring to a document name “Understanding heavily indebted consumers in South Africa – updated study taking into account the impact of implemented and proposed policy intervention” by the National Treasury, which did the initial research in the matter.

Mr Macpherson said the current study looks solely at consumers earning below that amount. He said all indicators are that other income groups are in distress. He further stated that the role that credit life insurance plays in over-indebtedness should also be investigated, as well as debt counselling.

Mr Macpherson further highlighted the issue of the balloon payments in vehicle financing and how it puts consumers in distress when the balloon payment becomes due at the end of the finance term, sometimes as much as 60% of the total cost. “We need to understand the broad spectrum of consumer behaviour.”

Committee Member Ms Priscilla Mantashe agreed with the proposal, as she felt the Committee does not need “narrow” research. She furthermore wanted timeframes for completion of the research.

Mr Williams indicated that the sub-committee will now take its proposals to the full Committee for discussions. The sub-committee also resolved to give National Treasury a maximum of eight weeks to attend to the first phase of the research, which will address amongst other things the middle income indebtedness issue, with the balance having to reach Committee in January 2018.

Rajaa Azzakani

16 August 2017