Credit Bill provides challenge for HR practitioners

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Many credit providers like banks, retailers and microlenders, are totally underprepared for the staffing implications of the National Credit Bill which is currently under debate in parliament and is likely to be passed into law in the next few months.

So says Sarah Babb, Managing Director of The Skills Framework, one of South Africa's leading strategic skills development consultancies that has previously consulted to the Department of Labour on the Skills Development Act and to corporate leaders at companies such as SAB, Fasset and Volkswagen.

"We expect the National Credit Bill to be passed later this year and this will leave many companies totally underprepared for the new procedures, organisational structures and additional staff numbers and skills that will be needed to comply with the Bill - and what it means in day to day application.

"It's certainly likely to prove a unique challenge for HR practitioners.

"For example, the Bill is likely to place the onus for credit provision squarely on the shoulders if the credit provider which means that they can now be held liable for providing credit recklessly even if under the current credit checking processes and legislation a borrower looks sound.

"Clearly a lot more time and effort will need to be put in to ensure that an applicant is credit worthy and hence more manpower and know-how will be fundamental to meeting the Bill's requirements."

Babb points out that many companies will need customised solutions for their particular organisations and warns that some businesses will simply try and 'patch the hole' caused by the need for a bigger and wider skill set and for the need to contain costs.

"But that is not the right way to approach it. Even though HR departments are usually under pressure to produce ever greater returns on their expenditure, it's important that training and skills development be strategically aligned with overall business objectives.

Often this task falls with the HR department and many are feeling overwhelmed by just what they need to do.

"We have often been called in by HR practitioners when they are facing a major shift in their operating environment and are concerned with how to respond. But it is more often than not a great chance to take stock of skills and actually make a positive and informed change which leads to a sustained competitive advantage.

"At the very least, companies urgently need to undertake a skills audit to ensure they can seamlessly adjust to the Bill's necessities."

Babb notes that many companies are likely to find themselves in a 'whole new regulatory world' as many of the acts pertaining to each subsector of the credit providing and credit checking industry such as the Usury Act for Banks, Credit Agreements Act for retailers and Usury Act for Microlenders, will be replaced by the National Credit Bill.

"This means the HR challenge begins by understanding just what the Bill means before deciding on how to get the requisite staff skills and headcount."

The proposed Bill has also put a lot of pressure on credit bureaus as credit providers will ultimately look to them for the more comprehensive information needed to make informed credit decisions.

"Credit bureaus will now be charged with ensuring that their information is accurate which removes that onus from credit applicants - so it's likely they will also need increases in staff numbers to get that right."

Babb, who has also consulted extensively to microlenders including the Microfinance Skills Project, says that microlenders will be hit hard by the Bill because of the expected lending rate caps as well as greater credit checking responsibilities.

"Microlenders typically don't have the infrastructure and vast expertise of the bigger credit providers so may need to assess their skills and processes particularly carefully."

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