Access to credit plays an important role in improving the quality of lives of consumers – especially in the purchase of property, cars, furniture and household goods. It is also plays an important role in helping small businesses to start and create jobs – but this is undermined by the heavy-handed behaviour of credit bureaus. The problem is that it is far too easy to blacklist a consumer, and far too difficult for that person to recover their ability to borrow.
Credit bureaus are, essentially, a law unto themselves. They collect information about people who default with their repayments on loans or purchases, and sell this information to lenders.
But they do this on their own terms. They decide who goes onto a blacklist, and why. They decide whether the allegations are factual, and how this personal information is used. They even decide how much to charge you if you want to see information about yourself. Surely consumers should have access to their own file for free?
Being an industry with its own association allows credit bureaus the resources and influence to lobby government more effectively than consumer groups – inevitably putting consumers at a disadvantage when it comes to policy issues.
Sipho Ndlovu (not his real name) was forced to flee his house at Isipingo in Durban during the political violence of the late 1980s – his life, and the lives of his wife and daughters, was in grave danger. The ongoing violence meant that he could not return, and he had to make plans to stay elsewhere. He still had to keep up the mortgage repayments on the house that he had left, however, but could not afford to do this while paying rent in a safer area. He fell behind with his mortgage repayments, and was blacklisted by the bank. Bit by bit, and after a number of years, he finally paid off that mortgage. He then wanted to purchase a home in the area he had moved to. The bank would not lend him the money, though. They simply refused to rescind the judgment.