Truworths (TRU): Debt Relief – Impact on Retailers

We assess the potential impact of the approved National Credit Amendment Bill on the credit retailers. We find that retail store cards form a small part of the affected unsecured credit categories, and that retailers have managed their exposure well with a stable account base, and low growth in the average account balances of their customers. We list issues which could reduce the extent of the actual debt relief and the consequent impact on the retailers and address the concern that the debt relief would create a moral hazard by drawing on the experience following the removal of adverse consumer credit information in 2014. We conclude that the risk is low that the current debt relief measures would encourage good-standing credit consumers to neglect their payment obligation.