Debt review is one of the most important consumer protections built into South African credit law. As a core part of the National Credit Act (NCA), it offers families in genuine financial distress a methodical way to restructure unmanageable obligations, halt legal action and avoid the kind of financial collapse that can take years to recover from. For households that truly need it, debt review can be transformative, and the registered debt counsellors who guide consumers through the process play an important role in the credit system.
That should be the starting point of this conversation, but it cannot be the end, especially given new data that underscores how urgent the rest of it has become. Old Mutual’s recently released 2026 Savings and Investment Monitor found that 50% of working South Africans now worry about debt “often” or “always”, up from 43% two years ago, and rising to 56% among lower-income earners. This is precisely the environment in which consumers are more likely to seek solutions quickly, regardless of whether they are the right fit.
The shift is stark: Old Mutual reports that in the past year 14% of working South Africans applied for debt review or counselling, alongside a sharp rise in personal loan uptake. DebtBusters’ Q4 2025 Debt Index reinforces this trend, showing that debt counselling completions are now almost 12 times higher than a decade ago. Most applicants hold personal or payday loans.
Under a debt review order, a registered counsellor assesses a household’s financial position, negotiates restructured terms with creditors and consolidates repayments through a single distribution agent. Once in place, the consumer cannot access new credit until every restructured debt is settled and a clearance certificate issued, a process that usually takes several years. For genuinely overindebted households, that restriction is protective. It creates breathing room and prevents the cycle of borrowing to repay debt.
The difficulty is that not every consumer who enters debt review is in that position. There are increasing reports of consumers being targeted through social media, WhatsApp campaigns and telemarketing calls that promote debt review as a quick fix. These pitches focus on lower monthly repayments without fully explaining the long-term implications.
Households are often left worse off
When consumers enter debt review without fully understanding what it commits them to, the outcome can be very different. What is intended as protection can result in years of exclusion from regulated credit, regardless of whether that level of intervention was necessary in the first place.
A household that did not require restructuring but gets locked out of formal credit is left more fragile, not less. Emergencies do not pause for debt review. Faced with no access to regulated lending, many turn to the only lenders willing to extend credit under these conditions: unregulated mashonisas, or loan sharks. Old Mutual’s data bears this out: borrowing from informal lenders rose from 12% to 19% of working South Africans in a single year.
A Wonga South Africa Informal Lending Report published in 2018 estimated that at least 40,000 illegal lenders were operating in South Africa. That number is likely to have grown since.
Of greatest concern is that these operators have been known to charge 30%–100% a month and often rely on coercive practices, including confiscating IDs, bank cards or Sassa cards as security.
By contrast, regulated short-term credit is capped under NCA regulations at 5% a month for a first loan, falling to 3% thereafter. These limits are specifically designed to prevent the escalating-cost borrowing problem found in the unregulated credit market.
The regulatory framework is outdated
A major challenge is that the regulatory framework governing short-term credit has not been meaningfully updated since 2015. Over that time, the cost of providing credit has risen, driven by inflation, higher compliance requirements and rising operational costs. Regulated pricing structures — interest rate caps, initiation fees and service charges — have remained largely unchanged.
The result is an increasingly constrained and risk-averse formal lending environment. In practical terms, more applications are being declined. National Credit Regulator data shows that 65.3% of credit applications were declined in the fourth quarter of 2024, even as application volumes rose. For consumers, this removes access to safe, regulated options.
Most borrowing in South Africa is not reckless; it is necessary. Old Mutual’s research shows that 62% of personal loan holders borrowed to cover an unplanned expense. This shows up in everyday loan applications: a parent covering a child’s school sports tour, a worker repairing a car needed to earn an income, or a household dealing with an unexpected appliance failure.
Old Mutual also found that many consumers do act early when they realise they may struggle to meet their credit obligations, rather than waiting until they fall behind. About 38% have approached a creditor in the past year to arrange alternative payment terms, up from 32% the year before. When households have the information and confidence to engage directly, many do so, rather than entering into long-term arrangements that may not be necessary.
A credit system that works well for South African households must support the full spectrum of need: making debt review accessible for those who genuinely require it, encouraging direct engagement with creditors where sufficient, and ensuring that short-term credit remains accessible within a regulatory framework that is regularly updated to reflect current economic realities.
Strong households aren’t ones that never borrow or never restructure. They’re households that are able to engage with credit on their own terms, armed with the information they need, inside a system that protects them at every step.
Morgan is the CEO of Prime Loans
