A technical report on the consumer credit insurance (CCI) market in South Africa was recently released for comment.
The report, compiled by National Treasury and the Financial Services Board, identifies certain abuses in market conduct and business practices in the CCI industry.
The technical report identifies the following issues:
- Lack of transparency in the total cost of credit.
- High premiums.
- Difficult to compare due to differing products.
- Needs of target market not being covered.
Comment is sought on three areas in particular:
- Regulating the pricing of CCI.
- Regulating market conduct non-pricing practices.
- Protecting consumers through insurance cover for credit providers.
A final policy document will be drawn up, after which draft legislation will be formulated.
Treasury indicated that workshops with key stakeholders will be arranged to enhance the quality of input.
Comment is invited until 30 September 2014