OCTAGON Business Process Management. Challenges with the NCAA and Company Credit Policy
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OCTAGON
Credit Processes & Loans Administration.
Business Process Management.
Challenges with the NCAA and Company Credit Policy
Who is Octagon?
“Octagon is a leading solutions provider for
Credit application processing and Loans management in South Africa.”
Specialising in the Credit & Loans environment since 1998
Own products built and maintained by Octagon in SA
Systems and integration is deployed in Credit Bureaus, Telkom, Major
Retailers, Financial Institutions, Attorneys, Estate Agencies & Credit
Grantors
Products for Credit Application Processing and Decisioning, Account
Management & Collections.
Clients: Furniture & Clothing Retailers, Asset Based Finance, Vehicle
Finance, Microlenders, Attorneys, Mortgage Originators, Estate Agencies
and Small Business.
Fully integrated Loans Management System product with Format 700V2
reporting.
Copyright © Octagon -2019
Driverless Taxi
Copyright © Octagon Group -2096
Credit Application Processing
Customer acquisition (Sales channels Web, SMS)
The Company Credit Vision
Know your Customer KYC
Cradle to the Grave
Credit Strategy
Credit Decisions
Reports & Records
Copyright © Octagon -2019Customer acquisition
Traditional channel own sales force, formal
marketing, internet marketing, social media.
Utilizing existing customers who are paid up and
pre vetted
Finding qualified leads
Getting pre vetted approved client lists.
Getting leads via web, short message code SMS
channel or using USSD.
Copyright © Octagon -2019OCTAGON
THE CREDIT PROCESS VISION
Information Sources
Credit Bureaus SACRRA
Software Products WEB WWW or V P N
Enabling Transactions
DATA
SWITCH
(SPOC)
Value Ads. Loyalty
Insurance etc.
Usage Apps
& Billing Processing
Back office
Score engines. Financial Providers
Decision process
Loan administration Treasury, Internal Data
CRM
Copyright © Octagon -2019DON’T Judge too quickly
Copyright © Octagon -2019NCAA
To amend the National Credit Act, 2005, so as to amend certain
definitions; to provide for the alteration of the governance structure of
the National Credit Regulator; to empower the Chief Executive Officer
to delegate certain functions to other officials of the National Credit
Regulator; to provide for the registration of payment distribution
agents; to tighten measures relating to debt counsellors and the conduct
of their practices as debt counsellors; to allow registrants to voluntarily
cancel their registration; to empower the Minister to issue a notice for
the removal of adverse consumer credit information; to provide for
automatic removal of adverse consumer credit information; to
empower the National Consumer Tribunal to declare a credit
agreement reckless; to provide for the registration and accreditation of
alternative dispute resolution agents; and to provide for matters
connected therewith.
Copyright © Octagon - 2019Automatic removal of adverse consumer credit information
„„71A. (1)The credit provider must submit to all registered credit bureaux within seven
days after settlement by a consumer of any obligation under any credit agreement,
information regarding such settlement where an obligation under such credit agreement
was the subject of—
(a) an adverse classification of consumer behaviour;
(b) an adverse classification enforcement action against a consumer;
(c) an adverse listing recorded in the payment profile of the consumer; or
(d) a judgement debt.
The credit bureau must remove any adverse listing contemplated in subsection (1)
within seven days after receipt of such information from the credit provider.
If the credit provider fails to submit information regarding a settlement as contemplated
in subsection (1), a consumer may lodge a complaint against such credit provider with
the National Credit Regulator.
For the purposes of this section— (a) „adverse classification of consumer behaviour‟
means classification relating to consumer behaviour and includes a classification such as
„„delinquent‟‟, „„default‟‟, „„slow paying‟‟, „„absconded‟‟, or „„not contactable‟‟; and (b)
„adverse classification of enforcement action‟ means classification relating to
enforcement action taken by the credit provider, including a classification such as
„„handed over for collection or recovery‟‟, „„legal action‟‟, or „„write-off‟‟.‟‟.
Copyright © Octagon - 2019Application of prescription on debt
No person may sell a debt under a credit agreement to which this Act applies and that
has been extinguished by prescription under the Prescription Act, 1969 (Act No. 68 of
1969).
No person may continue the collection of, or re-activate a debt under a credit agreement
to which this Act applies— (i) which debt has been extinguished by prescription under
the Prescription Act, 1969 (Act No. 68 of 1969); and (ii) where the consumer raises the
defense of prescription, or would reasonably have raised the defense of prescription had
the consumer been aware of such a defense, in response to a demand, whether as part of
legal proceedings or otherwise.
Copyright © Octagon - 2019CRITERIA TO CONDUCT AFFORDABILITY
ASSESSMENT
APPLICATION These Regulations apply to:
(a) current, prospective and joint consumers; (b) all credit providers; and
(c) all credit agreements to which this Act applies, subject to Regulation 2.
These Regulations do not apply to a credit agreement in respect of which the consumer is a
juristic person and do not apply to:
(a) a developmental credit agreement;
(b) a school loan or a student loan;
(c) a public interest credit agreement;
(d) a pawn transaction;
(e) an incidental credit agreement;
(f) an emergency loan;
(g) a temporary increase in the credit limit under a credit facility;
(h) a unilateral credit limit increase in terms of sections 119(1)(c);119(4); and 119(5) of the Act
under a credit facility;
(i) a pre-existing credit agreement in terms of Schedule 3 Item 4(2) of the Act;
(j) any change to a credit agreement and/or any deferral or waiver of an amount under an
existing credit agreement in accordance with section 95 of the Act;
And (k) mortgage credit agreements that qualify for the Finance Linked Subsidy Programs
developed by the Department of Human Settlements and credit advanced for housing that falls
within the threshold set from time to time.
Copyright © Octagon - 2019 A credit provider must make a calculation of the consumer's existing financial means, prospects and
obligations as envisaged in sections 78(3) and 81(2)(a)(iii) of the Act.
The credit provider must utilise the minimum expense norms table below, broken down by monthly
gross income when calculating the existing financial obligations of consumers.
The methodology in the table requires for:
(a) credit providers to ascertain gross income; (b) statutory deductions and minimum living expenses to
be deducted to arrive at a net income, which must be allocated for payment of debt instalments; and (c)
when existing debt obligations are taken into account, the credit provider must calculate discretionary
income to enable the consumer to satisfy any new debt.
Table l: Minimum Expense Norms Minimum Maximum Minimum monthly Fixed Factor
Monthly Fixed Factor = % of Income Above Band minimum
R0.00 to R800.00 R0.00 100%
R800.01 to R6,250.00 R800.00 6.75%
R6,250.01 to R25,000.00 R1,167.88 9.00%
R25.000.01 to R50,000.00 R2,855.38 8.20%
R50,000.01 Unlimited R4,905.38 6.75%
The credit provider may however on an exceptional basis, where justified, accept the consumer's
declared minimum expenses which are lower than those set out in table 1 provided the questionnaire set
out in the Schedule, as issued from time to time, is completed by the consumer or joint consumers.
When conducting the affordability assessment, the credit provider must:
(a) calculate the consumer's discretionary income; (b) take into account all monthly debt repayment
obligations in terms of credit agreements as reflected on the consumer's credit profile held by a
registered credit bureau; and take into account maintenance obligations and other necessary expenses .
Copyright © Octagon - 2019whoops
Copyright © Octagon - 2019Existing financial means and prospects
A credit provider must take practicable steps to assess the consumer or joint consumer's
discretionary income to determine whether the consumer has the financial means and
prospects to pay the proposed credit instalments.
A credit provider must take practicable steps to validate gross income, in relation to:
(a) consumers that receive a salary from an employer:
(i) latest three(3) payslips; or (ii) latest bank statements showing latest three(3) salary
deposits;
(b) consumers that do not receive a salary as contemplated in (a) above by requiring:
(i)(ii) latest three(3) documented proof of income; or latest three(3) months bank
statements;
(c) consumers that are self-employed, informally employed or employed in a way
through which they do not receive a payslip or proof of income as contemplated in (a) or
(b) above by requiring:
(1) latest three (3) months bank statements; or (ii) latest financial statements.
Where the consumer's monthly gross income shows material variance, the average gross
income over the period of not less than three (3)pay periods preceding the credit
application must be utilised.
The consumer must accurately disclose to the credit provider all financial obligations to
enable the credit provider to conduct the affordability assessment.
The consumer must provide authentic documentation to the credit provider to enable the
credit provider to conduct the affordability assessment.
Copyright © Octagon - 2019CREDIT STRATEGY
Single Customer View
Information
Sources
Credit Information • Experian
Online Financing • Transunion
Property Info • XDS
Online Insurance • Compuscan
Bank Acc • NLR / CPA
Verification •Profiler
•Deeds Offices
•Frontier • SAPTG
•Dossier • Refcheck
•Credit Office
WWW • Criminal records
Clients • SAFPS
• ID Verification
Value Adding
SWITCH Services
(SPOC)
• Pre Approvals
• Term Life
Integrations Monthly • Credit Life,
Loan Management Billing • 3rd Party service providers
Collections
Applications Financial
Processed Processes
CREDIT REPORTING • Account Validations
Total Applications, Referrals,
Approvals, Declines • Check own Data
• Disbursement
Management Reporting • Global Exposure
Total Book, Loan Values, Monthly
House Keeping Financials. • Collections, D/O, ADOS
2017 Copyright © Octagon -2019THE STATE OF CREDIT RISK
ANALYTICS
IN FINANCIAL SERVICES SURVEY
RESULTS
Who we spoke to
In July 2015, FC Business Intelligence conducted a survey of North
American Financial Services credit risk professionals
There were over
125
respondents in total
This is the amount of time they
currently spend on analytics:
NOT MUCH A SMALL A MODERATE
AT ALL AMOUNT AMOUNT
15% 8% 50%
THE MAJORITY ALL OF
OF MY TIME MY TIME
25% 2%Key Findings from the Survey
87%
of financial services
industry agreed that
“Analytics is the biggest
game-changer for the credit
risk industry in 2014 -
35%
2015” of credit risk industry
professionals said that
they have seen good to
transformative results from
the use of analytics
$ 100 37%
100
100 $ 100 of credit risk professionals are
starting to see small rewards
from analytics incentives
72% of credit risk
professionals believe
that there will be constant
changes to their analytics
platform moving forwardQ - Since 2010, how much has analytics
changed credit risk in your organization?
GO
Not much at all A small amount Stayed the same Changed slightly Changed dramatically
6% 5% 2% 30% 57%
Q - Does your current data analytics strategy allow you to
more effectively manage credit risk?Q - Which of these roles are spearheading
analytics in the organization?
Chief
Chief Executive
Officer
12% Chief
Compliance
Officer
10% Credit
Officer
15%
Chief Chief
Financial
Officer
10% Risk
Officer
35%
9% 2%
4% 3%
Chief Chief
Data/Analytics Operating
Officer Chief Chief Officer
Marketing Information/
Officer Technology
Officer
Q - What are the top 3 challenges in deploying credit risk
analytics within your organization?
Accessing
th th
st 4 expertise and
5 Responding
to regulatory/
1 2
nd
3 rd
identifying
the right
people for the
job
shareholder
expectations
Enterprise- Modelling Restructuring
data and th th Stress
wide analytics
integration employing
predictive
siloed data
and legacy
systems
6 Applying
new software
and system
7 testing and
responding
analytics to risk
solutions
scenarios
th Sourcing th
8 external
structured/
9 Detecting
fraud and
privacy
unstructured concerns
dataQ - What are the top 3 drivers for employing new
credit risk analytics within your organization?
Minimized risk related losses
72%
Regulatory changes
65%
Maintain a competitive edge 43%
Increased transactional
speed and efficiency 40%
Access to new analytics
competencies 28%
Customer expectations 20%
Better customer relations 17%
Company shareholder
requirements
15%(BPM) Business Process Management
Cradle to Grave
Credit Application
Application
Quotation
Capture
Credit Vetting
Credit
Min Policy Affordability
Bureau Fraud Check
Rules Check
Enquiry
Authorization
Contract Account
Approval Disbursement
Generation Creation
ACCOUNT MANAGEMENT & MONITORING
COLLECTIONS, DEBT REPAIR
Copyright © Octagon -2019Hmmmmm
Copyright © Octagon Business Solutions -2019Why use Octagon
Registered reseller Credit bureau NCRCB43
+-1000 companies use our software products
Specialist’s in all forms of finance, Micro to Home Loan.
Octagon Gateway switches +-12 million transactions per annum
Process credit applications +- R500 million per month
Approximately R8 Billion under management
Automatic approvals within 30 seconds
Consistently applies business & credit strategy uniformly
Full MIS reporting and Performance statistics.
Copyright © Octagon Business Solutions -2019Records
Credit provider must maintain the following
information – for 3 years after the termination of the
agreement or decline of application
– Consumers full name and surname
– ID or passport and date of birth
– Date granted, amount, instalment amount,
number of instalments
– Defaults
– Date terminated and reason
Copyright © Octagon -2019The Road Ahead
Copyright © Octagon Group -1998Questions
“The most fertile source of insight is hindsight.”
Morris Kline (Mathematics: The Loss of Certainty, 1980 )
“May you have the hindsight to know where you've been,
The foresight to know where you are going,
And the insight to know when you have gone too far.”
Irish Blessing
Thank you
Copyright © Octagon -2019You can also read
