How to deal with 4 million
April 16, 2014
In late February, Dr Rob Davies – minister of trade and industry – gave notice of new regulations to the National Credit Act, 2005. The change came into effect on 1 April 2014 and the department of trade and industry (dti) has given SA credit bureaus approximately two months to remove adverse consumer credit information and information relating to paid-up judgements. In other words, 6.5 million status updates relating to 4.2 million credit profiles will soon be deleted. How will this affect your recruitment strategy?
Negative descriptions – such as ‘slow payer’, ‘delinquent’, ‘default’ or ‘non-contactable’ – will no longer be allowed. The credit bureau will also not be allowed to give out enforcement action indicators, such as ‘legal action’, ‘written off’, ‘repossessed’ or ‘overdue’.
As it allows for the once-off removal of negative credit information, plus the continuous removal of paid-up judgements. Minister Davies’ announcement means that there will be no:
There will also be no notice of actions taken against these individuals. We’ll be left in the dark about histories, behaviour and trustworthiness of these individuals. The collections information will be deleted and copies of previous enquiries will no longer be available online.
Employers must build in the increased risk into their recruitment strategy
While this doesn’t necessarily mean that the debt is written off, it does hide important information when investigating potential employees. In effect, it will increase security risks around new people coming into a company. This extends to vendors you might be about to use. The landscape will have to change, from the way credit is provided to consumers to the screening process companies will use in a security analysis.
The truth is that employees with a poor credit history can pose a security threat. The previously accessible information would help put this history in context as there is a difference between a slow payer and a delinquent payer. It’s important to know if the individual provided the correct information or deliberately misrepresented basic facts.
Use other checks to gauge the candidate’s reputation
Without the credit information as a resource, other investigative methods can be used. The idea is to look harder at other information – such as criminal checks, education certificate verification and so forth – to discover more about the individual’s reputation. If there are discrepancies here, it should raise a red flag. If someone can lie on a credit application, they’ll probably fabricate their CV so make sure you check this closely too. Don’t discount a social media investigation. The same process applies to contract or temporary employees.
Moreover, creating a profile of a typical unethical or high-risk individual is important before hiring a new member of staff. This upfront security analysis and screening process is more efficient than dealing with the costly and lengthy legal action involved with dismissing an employee after the fact.