A guide to adverse listings

‘Adverse listing’ is a remedy available to a creditor to negatively affect a debtor’s credit profile for continued non-payment of a debt owed. As a registered credit bureau, TPN has the functionality to load these adverse listings against the profiles of natural persons and juristic entities.

TPN subscribers are able to log on to the credit bureau and load payment profile information and adverse listings, but this can sometimes be a daunting task given the regulations that must be met before an adverse listing can legally be loaded. We wanted to provide a comprehensive and helpful guide to make your debt collection just a tad easier and a lot more effective. So, let’s break it down step by step…

Requirements to be met to load an adverse listing on a credit profile:

One can only be adversely listed in terms of a credit agreement and a rental agreement is specifically excluded from being a credit agreement in terms section 8 of the National Credit Act 34 of 2005 (‘NCA’). However, as interest is charged for late payments in terms of the TPN Lease Agreement, this constitutes an ‘incidental credit agreement’ and so, is regarded as a credit agreement in terms of the NCA. A tenant can therefore be adversely listed in terms of a lease agreement, subject to the legislative requirements being met.

Let’s address the requirements, as set out in Regulation 19 of the NCA Regulations, that have to be met before an adverse listing can be loaded on a debtor’s credit profile:

• A 20-business day letter of demand must be sent to the debtor requiring payment of the outstanding amount;
• Included in the letter must be a warning that, should the payment not be received timeously, it may result in their credit record being adversely affected; and
• The debtor must be in arrears for 3 billing cycles.

Important note: The above requirements do not have to be met in a specific order, in respect of the letter of demand and the three billing cycles. This does not mean that the debtor has to be in arrears for 3 billing cycles after the letter of demand is sent in order to be adversely listed. The three billing cycles in arrears may be present before or after the letter of demand has been sent.

Adverse listings remain on a credit record for one year

Now that you have met the requirements to adversely list a debtor and the listing has been loaded onto the credit bureau, what’s next? The adverse listing will only remain on the debtors’ credit record for a period of one year, as per Regulation 17 of the NCA, and will automatically be removed once this period has expired. Once a debtor has been blacklisted once, you are not entitled to adversely list this debtor again.

Can you re-load an adverse listing if it is removed due to non-compliance?

No! That is why it is so important to ensure that you are loading a listing correctly, because if an adverse listing is removed due to non-compliance with the NCA and the Regulations, you will not be able to list that debtor again. You only have ‘one bite at the cherry’ so always ensure you have covered all your bases before listing.

The adversely listing can only be removed earlier than the one-year period if the entire debt has been paid by the debtor or it is found to be incorrectly loaded.

What about prescribed debt?

In respect of debts that have prescribed in terms of the Prescription Act, i.e. it has been 3 years since the debt became due, these debts have been extinguished and a debtor cannot be adversely listed for such a debt. Therefore, it is important to act upon debts owed to you timeously and not waste time as the clock is ticking.

A surety to an agreement cannot be adversely listed

It is also important to note that a deed of suretyship does not constitute a credit agreement, and therefore a surety to an agreement cannot be adversely listed. You are still entitled to claim the outstanding amount from the surety and proceed to get a judgment against the surety, but a surety will not be able to be adversely listed.

Is an adverse listing the same as payment profile information?

It is important to note that there is a difference between an adverse listing and payment profile information. An adverse listing is a listing that negatively impacts the credit record of a debtor due to an unpaid debt, provided the above-mentioned requirements have been met. However, payment profile information is factual information relating to a tenant’s payment history during their lease period.

Payment profile information can be loaded on a tenant’s credit record for the period of their specific lease agreement. In terms of the National Credit Act, you can load payment profile information without that person’s prior written consent. However, unlike an adverse listing, payment profile information does not require a 20-business day notice to load such information. In terms of Regulation 17 of the NCA Regulations, payment profile information remains on one’s credit record for a period of 5 years.

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