PROGRESS ON THE IMPLEMENTATION OF THE HOME LOAN
AND MORTGAGE DISCLOSURE ACT 2000 (ACT NO. 63 OF
2000(HLAMDA) TO THE PORTFOLIO COMMITTEE
PRESENTER : OFFICE OF DISCLOSURE
DATE
: 4 FEBRUARY 2014
1
PURPOSE OF THE BRIEFING
• First interaction with the Portfolio Committee
• Briefing the Portfolio Committee on the
establishment of the office
• Briefing on progress made on implementation
of the Act
• Wayfoward of the Office
2
TABLE OF CONTENTS
1.
2.
3.
4.
5.
6.
7.
BACKGROUND
HOME LOAN AND MORTGAGE DISCLOSURE ACT, 2000 (ACT
63 OF 2000) (HLAMDA)
ESTABLISHMENT OF THE OFFICE
COMPOSITION OF THE OFFICE OF DISCLOSURE
MEMBERS TERMS OF OFFICE
FUNCTIONS OF OFFICE OF DISCLOSURE
HOW WE EXECUTE THE MANDATE
3
TABLE OF CONTENTS
8.
9.
10.
11.
12.
13.
14.
15.
16.
WHO IS TO COMPLY WITH THE ACT
LIST OF FINANCIAL INSTITUTIONS
ENGAGEMENTS WITH STAKEHOLDERS
INTERVENTION MEASURES
RISKS INHERENT TO THE HOME LOAN PROCESS
ACHIEVMENTS
CHALLENGES
WAY FORWARD FOR THE OFFICE
ANNEXURES
4
BACKGROUND
• The Home Loan and Mortgage Disclosure Act ,2000 ( Act 63
of 2000) (HLAMDA) was enacted in 2000.
• The regulations were Gazetted on 13 July 2007 as Notice
842 of 2007.
• In terms of Presidential Proclamation No. 15 of 2007 the Act
came into operation with effect from 02 July 2007.
5
HOME LOAN AND MORTGAGE DISCLOSURE ACT, 2000
(ACT 63 OF 2000 )(HLAMDA)
PURPOSE OF THE ACT
“ To promote fair lending practices, which require disclosure by
financial institutions of the information regarding the
provision of home loans; to establish an Office of Disclosure;
and to provide for matters connected therewith”.
• The Act gives the Office a mandate to monitor the financial
institutions’ lending practices and patterns through receiving
and analysing information.
6
ESTABLISHMENT OF THE OFFICE
• The Office of Disclosure is established in terms of Section 4 of
the Act while members of the Office are appointed in terms of
Section 6 of the Act.
7
COMPOSITION OF THE OFFICE
•
•
•
•
•
•
•
•
•
Ms. Thebi Moja
Dr. Morgan Pillay
Adv. Tshepiso Mphahlane
Ms. Penelope Beck
Ms. Thembeka Semane
Mr. William Hoefling
Dr. Makhosana Nyamazana
Mr. Harold de Kock
Ms. Nozi Jikazana
Chairperson
Deputy Chairperson
Member
Member
Member
Member
Member
Member
Member
8
MEMBERS TERMS OF OFFICE: APPOINTMENT DATE
The members were appointed in different periods as follows:
• The first Office bearers were appointed on 9 December 2010.




Ms. T Moja
Adv. T Mphahlane
Ms. P Beck
Ms. T Semane
Chairperson
Member
Member
Member
9
MEMBERS TERMS OF OFFICE: APPOINTMENT DATE
•
The rest of the members were appointed with effect from
27 July 2012




•
Mr. W Hoefling
Mr. H de Kock
Ms. N Jikazana
Dr. A Pillay
Member
Member
Member
Deputy Chairperson
The last additional member Dr. M Nyamazana was appointed
on 28 September 2012.
10
MEMBERS TERMS OF OFFICE
• In terms of Section 8(1) of HLAMDA, Period of office, vacation
of office and filling of vacancies, “A member of the Office
must be appointed for such period, not exceeding three years,
as the Minister may determine at the time of appointment”.
• The term of Office for the first 4 members appointed on 9
December 2010 has ended on 9 December 2013 in terms of
Section 8(1) of HLAMDA.
11
FUNCTIONS OF OFFICE OF DISCLOSURE
(a) Receiving the required information;
(b) Analysing and interpreting the required information;
(c) Receiving and investigating public comments on financial
institutions relating to home loans;
(d) Making available to the public, information that indicates
whether or not financial institutions are serving the housing
credit needs of their communities and rating such financial
institutions in accordance with such information;
12
FUNCTIONS OF THE OFFICE OF DISCLOSURE
cont…
(e) Assisting in identifying possible discriminatory lending
patterns and assisting any statutory regulatory body in
enforcing compliance with anti-discriminatory legislation;
(f) Reporting to the Minister annually in respect of its work
during the preceding year, and such report must include
analysis of the performance of each financial institution in
complying with the terms of the Act; and
(g)Making recommendations to the Minister on any matter
falling within the scope of this Act.
13
HOW DO WE EXECUTE OUR MANDATE
• HLAMDA REGULATIONS
The regulations have been made in terms of Section 12 of
HLAMDA.
The regulations have been implemented with its set of
guidelines to financial institutions on how information
must be disclosed to the Office simultaneously with the
Act through a Government Gazette Notice No. 842 of
2007 with effect from 2 July 2007.
• SECRETARIAT
The Department has established a Secretariat of the Office
of Disclosure within the department to carry out the
mandate in terms of Section 11 of the Act .
14
HOW DO WE EXECUTE OUR MANDATE
• REPORTING FORMAT
 The Compliance Manual is a guiding tool on how information should
be disclosed to the Office.
•
ANNUAL RETURN FORM
 This is an aggregated information captured as follows:
(1) The total number and Rand amount of applications – (a) Received
– (b) Approved
– (c) Declined
– (d) Disbursed
(2) The total number of applications received, approved, declined, and
disbursed, respectively, in respect of:
– (a) Race groups (African, White, Indian, Coloured)
– (b) Province
15
WHO IS TO COMPLY WITH THE ACT
• All financial institutions that are registered in terms of the
Banks Act,1990 (Act No. 94 of 1990).
• All registered in terms of the Mutual Banks Act,1993 (Act No.
124 of 1993).
• Any registered financial institution whose business is, in full or
in part either the acceptance of deposits from the general
public, the advance of credit to persons or both such
acceptance and advance, with the security of a registered
mortgage bond or any other form of accepted security for the
purpose of providing home loans.
16
LIST OF FINANCIAL INSTITUTIONS
•
•
•
•
•
•
•
•
•
•
ABSA Bank Limited
African Bank Limited
Albaraka Bank
Bank of Baroda
Bank of China Jhb Branch
Bank of Taiwan SA Branch
Bidvest
Capitec Bank Limited
Citibank
Credit Agricole &
Investment Bank
• Deutsche Bank AG Jhb
Branch
• First Rand Bank Limited
• GBS mutual
• Grindrod
• Habib overseas
• HBZ Bank Ltd
• Hong Kong & Shangia
• Investec Bank Limited
• Ithala Ltd
17
LIST OF FINANCIAL INSTITUTIONS
•
•
•
•
•
•
•
•
JP Morgan Chase
Mercantile Bank Limited
Nedbank Limited
The South African Bank of
Athens Limited
SA Home Loans
SASFIN
Standard Bank
Societe Generale
•
•
•
•
•
•
•
•
•
Standard Chartered
State Bank of India
Imperial Bank Limited
MLS Bank Limited
Nedcor Investment Bank
Limited
People’s Bank Limited
Rand Merchant Bank
Limited
UBank Limited
VBS Mutual Bank
18
ENGAGEMENTS WITH STAKEHOLDERS
• Workshop with all stakeholders (Financial Institutions, Banking
Association of South Africa (BASA), Independent Regulatory
Board for Auditors (IRBA) and South African Institute of
Chartered Accountants (SAICA);
• Challenges related to disclosure of information to the Office
were identified and resulted in the establishment of a Task Team;
• The Task Team was mandated to further identify challenges and
propose workable solutions both technical and legislative; and
• Furthermore the Task Team was tasked with the development of
the draft Annual Return format.
19
INTERVENTION MEASURES
Completed
Regulatory return
X
Audit Assurance Standards
X
Awareness Campaign
X
Progress
HLAMDA Amendments
X
Amendments of Regulations
X
Amendments of Compliance
Manual
X
20
RISKS INHERENT TO HOME LOAN APPLICATION
PROCESSES
• Financial institutions receive applications from mainly two
sources i.e. their walk in customers and from Intermediaries/
Brokers. The loan originators/brokers submit initial loan
applications received to all Financial Institution to increase
the chance of applicant being approved for funding by at least
one Financial Institution.
• This results in more than one Financial Institution reporting
the same applicant in their reported applications.
• Hence there are multiple duplications in numbers submitted
to the Office. This applies to number of approved/declined
applications and related amounts as well.
21
ACHIEVEMENTS
• Appointment of the Members of the Office of Disclosure;
• Engagements with all stakeholders who are required to
disclose and submit information to the Office in terms of
Section 2 and other interested parties e.g. Banking
Association of South Africa (BASA), Independent Regulatory
Board for Auditors (IRBA) and South African Institute of
Chartered Accountants (SAICA);
• An Annual Return Form produced and approved by the
Minister in Dec 2010 for implementation w.e.f 01 January
2013;
22
ACHIEVEMENTS
• A detailed report on HLAMDA prepared for the Minister in
terms of the Act;
• Amendments to legislation identified and forwarded to Legal
Services and State Law Advisors for example reporting format,
comments vs complaints, penalty;
• Audit Assurance standards agreed upon between the
Independent Regulatory Board for Auditors , BASA and
financial institutions auditors in line with audit standards;
23
ACHIEVEMENTS
• Information received from financial institutions;
• Common reporting period of 01 January to 31 December for
all financial institutions which is due on 02 March annually;
• Risk Impact Assessment with recommendations being
finalised for purposes of statutory HLAMDA amendment;
• Amendments to legislation at an advanced stage and the
department awaits certification;
24
ACHIEVEMENTS
• Engagements with Provincial Human Settlements
Departments and municipalities regarding the mandate of the
Office has been successfully carried out; and
• Dissemination of information brochures (Complaints
Procedure Manuals and OoD Profile) to the public through the
provincial departments and municipalities on the functions
and responsibilities of the Office.
25
CHALLANGES
• Accounting standards an impediment to financial institutions
to comply with section 2 of HLAMDA which requires
disclosure of the required information in their financial
statements;
• Financial institutions systems readiness to accurately capture
data for disclosure in terms of the reporting categories e.g.
race;
• Financial institutions reluctance to provide raw data to the
Office ;
26
CHALLANGES
• Inadequate financial resources for further engagements with
local authorities (Provincial departments and municipalities);
and
• Inadequate resources to support the Office to facilitate public
community outreach programs nationally.
27
WAY FORWARD OF THE OFFICE
• Finalisation of amendment of the Act;
• Amendment of the regulations ;
• Enhancement of the Reporting Format e.g. to include FLISP
funded loans;
• Public outreach through consumer education sessions and
engagements with local authorities (CDW’s, Ward Committee
Members and stalls at shopping complexes); and
28
WAY FORWARD OF THE OFFICE
• Strengthen relations with Housing Institutions and other
relevant Entities.
• Stronger engagements with the financial sector e.g. African
Bank, Capitec;
• To improve analysis of information from financial institutions
which will enhance recommendation to the Minister.
29
THANK YOU
“We have come a long way – Celebrating 20 Years of Freedom!”
30
ANNEXURES
• The Home Loan and Mortgage Disclosure Act 2000 (Act No. 63
of 2000) (A) ;
• Regulations; (B)
• Compliance Manual; ( C)
• Annual Return Form; (D)
• Annual Report; (E)
• Summary of information received from financial institutions; (F)
• Proposed amendments; (G)
• Comments from the State Law Advisors and response by the
Department (H).
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CONTACT INFORMATION
OFFICE OF DISCLOSURE
DEPARTMENT OF HUMAN SETTLEMENTS
PRIVATE BAG X644
PRETORIA
0001
240 JUSTICE MAHOMED STREET
SUNNYSIDE, PRETORIA
0001
Tel: (012) 421 1799 / 1572
Fax: 0866147662 / 0866110018
E – mail: gaza.phoku@dhs.gov.za / disclosure@dhs.gov.za
Toll free: 0800 146 873
32
ANNEXURE F
SUMMARY OF INFORMATION RECEIVED FROM FINANCIAL
INSTITUTIONS
33
INFORMATION RECEIVED FROM FINANCIAL
INSTITUTIONS FOR THE PERIOD 1 JANUARY 2012 TO
31 DECEMBER 2012
INCOME BRACKET
R0 – R3500
R3501-R5500
R5501-R7500
R7501-R10000
R10001-R15000
15001 and above
LEGAL ENTITIES
TOTAL
TOTAL
NUMBER
R VALUE
NUMBER
R VALUE
NUMBER
R VALUE
NUMBER
R VALUE
NUMBER
R VALUE
NUMBER
R VALUE
57476
13034 M
25065
2653 M
26812
4227 M
37265
9499 M
87686
29327 M
678126
477677 M
NUMBER
R VALUE
NUMBER
R VALUE
5451
6781M
919053
497185 M
34
INFORMATION RECEIVED FROM FINANCIAL
INSTITUTIONS FOR THE PERIOD 1 JANUARY 2012 TO
31 DECEMBER 2012
RECEIVED SCORED
APPROVED APPROVED
TAKEN UP
APPROVED NOT DECLINED
TAKEN UP
NUMBER
919 053
835 799
344 792
130 398
75 556
500 069
RAND VALUE
R497 185m
R 479 736m
R 218 209m
R 70 822m
R 43 700.6m
R 278 640.7m
35
INFORMATION RECEIVED FROM FINANCIAL
INSTITUTIONS FOR THE PERIOD 1 JANUARY 2012 TO
31 DECEMBER 2012
Total
Number
Total R
Value
Application
s received
from
HDP’S
Applications
from HDP’S
declined
Home Loan
approved
to HDP’s
Home Loan
approved to
person living
in rural areas
814 222
356 473
398 948
155 572
R150
583.5m
R92 376.5m
R67 059.8m R3 527.6m
Home
Loan
approved
to person
living in
low
density
area
156 748
Home Loan
approved
to juristic
person
Home Loan
approved
to women
10 314
269 942
R3 561.7m
R11 250.8m
Home
Loan
appro
ved to
HDP
men
273
370
R57 623.2m R53
405.8
m
36
INFORMATION RECEIVED FROM FINANCIAL
INSTITUTIONS FOR THE PERIOD 1 JANUARY 2012 TO
31 DECEMBER 2012
Home Loan
approved to
African
Home Loan
approved to
Coloured
Home Loan
approved to
White
Home Loan
approved to
Asian
Home Loan
approved to
Other
Total
Number
361 719
50 904
239 520
34 126
82 827
Total R
Value
R54 955.9m
R13 505.6m
R136 043m
R15 266.6m
R10 117.7m
37