Regulation 23A has governed affordability assessment for NCR-registered credit providers since March 2015. In August 2025, the Department of Trade, Industry and Competition published draft amendments to the regulation, the most significant proposed changes to the affordability framework in a decade. The comment period closed on 13 September 2025. Promulgation is anticipated in 2026 with a transition period.
This is not a minor technical adjustment. The draft amendments introduce mandatory minimum household expense norms, separate calculation requirements for business credit, and tightened income verification standards. For credit providers who have been operating affordability assessments under the existing 2015 framework, these changes require a methodological review before the promulgation date, not after.
This post covers what changes, what stays the same, and what practical steps compliance teams need to take. It is based on the draft text as published, with reference to commentary from Cliffe Dekker Hofmeyr, Webber Wentzel, Afriwise, and Masthead. The final promulgated text may differ from the draft. Verify against the Gazette before implementation.
Why the August 2025 draft amendments matter
The current Regulation 23A has been in force since March 2015. It requires credit providers to assess affordability using verified income and expense data, but it has left significant discretion to credit providers in how they apply living expense figures to the affordability calculation. That discretion has created a problem: credit providers in competitive micro-lending markets have sometimes applied expense figures that bear little relationship to actual consumer living costs, a practice sometimes referred to as the “R500/month living expenses” fiction.
Courts and the NCT have noticed. The NCR v Tsoelli [2023] ZANCT 26 finding, where a micro-lender’s registration was cancelled for systematic affordability assessment failures, demonstrated that the NCR has the enforcement tools and the willingness to use them. The March 2026 court judgment on Section 81 reinforced the substantive assessment requirement. The August 2025 draft amendments operationalise that judicial direction at the regulatory level: by mandating minimum expense norms, the DTIC is removing the discretion that enabled the fiction.
For credit providers who already apply realistic expense norms in their affordability models, the amendments change little in practice. For those who have used low or flat expense figures to improve pass rates, the amendments require a fundamental methodology change. The existing Reg 23A framework was the foundation; the amendments raise the floor.
The minimum expense norms requirement: what it means
Proposed sub-regulation 23A(10) is the most consequential change in the draft. It requires credit providers to apply a mandatory minimum household expense norm when calculating a consumer’s discretionary income. The norms are income-band specific: a consumer earning R8,000 per month has a different minimum floor than one earning R25,000 per month.
The critical provision: even if the consumer declares lower actual living expenses on their application, the credit provider must use the minimum norm figure in the affordability calculation. Consumer declaration cannot go below the floor.
The practical impact of this change varies by lender. Consider two scenarios:
Scenario A: compliant lender. A lender who has been applying realistic expense norms from Statistics South Africa’s income and expenditure survey data, or using actual expenditure extracted from bank statements, will find that the mandated norms are broadly consistent with their existing methodology. The main compliance requirement is to formalise the income-band mapping and document that the norms table has been applied correctly for each application.
Scenario B: lender using low flat figures. A lender who has been applying a flat R1,500 or R2,000 living expense figure for all applicants regardless of income will face a methodology change that materially affects their affordability pass rates. Consumers who currently pass affordability at the stated income level will fail once the minimum income-band expense norm is applied. The lender’s existing approval rates are not a compliance consideration; the regulation requires the methodologically correct calculation.
The practical implications extend to system configuration. Affordability assessment tools (whether spreadsheets, proprietary LOS systems, or third-party software) will need to be updated to implement the income-band norm table and to apply it correctly for each application. For micro-lenders running manual spreadsheet-based assessments, this requires building the norm table into the calculation template and ensuring it is applied consistently across all applications.
Small business credit: a separate calculation framework
The draft amendments include provisions specific to SMME and business credit. Where a credit provider extends credit to a small business or SMME, the affordability calculation cannot apply the consumer household expense norm table. Instead, the credit provider must capture and verify the actual business operating costs.
This creates two distinct affordability methodologies that must be applied correctly to the right product type:
- Personal consumer credit: Verified gross income minus verified obligations minus the minimum household expense norm (income-band specific) equals discretionary income available for debt service.
- Business credit to SMME: Verified business revenue minus verified business operating costs minus existing business obligations equals net business cash flow available for debt service.
For credit providers who offer both personal and business credit products, this requires clear product categorisation at application and separate assessment flows for each. Applying consumer household norms to a business credit assessment, or vice versa, would be a compliance failure under the amended framework.
What changes for income verification
Current Regulation 23A(4) specifies the acceptable income verification documents: latest payslips, three months of bank statements, or income statements. The draft amendments propose tightening the standard around what “verified” means in practice.
The existing framework already requires that income be verified from documentary evidence. But “verified” has been interpreted variably. Some credit providers have treated a consumer-signed declaration of income as satisfying the verification obligation. The draft amendments move toward a stricter reading: income must be confirmed from a third-party document (payslip, bank statement, or income statement), not from the consumer’s own declaration.
For lenders whose consumer base includes informal workers and self-employed individuals where payslips are not available, bank statements become the primary, and sometimes only, acceptable income verification instrument. The three-month bank statement requirement is not new; the emphasis on it as the default for non-payslip income verification is strengthened.
The NCR audit risk associated with income verification gaps is well-documented. The three warning signs of an audit-vulnerable affordability process include accepting stated income without documentary verification, a failure mode the amended regulation explicitly addresses. NCR inspections have consistently identified missing or inadequate income verification documents as a leading finding in sampled application files.
The 2025 draft vs the current 2015 regulation: a practical comparison
A compliance team reviewing their affordability methodology against the draft amendments needs to assess six areas:
1. Expense norm application. Current: discretion to use any reasonable living expense figure, subject to not being lower than any specific norm tables in force. Draft: mandatory income-band specific minimum norms; no credit provider discretion to go below the floor.
2. Consumer expense declaration. Current: consumer declaration can inform expense figures used in the assessment. Draft: consumer declaration cannot result in a living expense figure below the mandatory minimum norm. The floor is the floor.
3. Business credit methodology. Current: no explicit distinction between personal and business credit affordability methodologies in the regulation. Draft: separate methodology required for SMME/business credit using actual business operating costs.
4. Income verification standard. Current: documentary verification from payslips, bank statements, or income statements required. Draft: tightened interpretation of “verified”: third-party documentary evidence, not consumer declaration. Bank statements elevated as primary instrument for informal income.
5. Assessment record content. Current: Reg 23A(4) specifies the components of the assessment. Draft: no fundamental change to the record requirement, but the expense norm applied must be demonstrably the correct income-band norm. The assessment record needs to show which norm band was applied and why.
6. Promulgation timeline. Current: 2015 framework in force. Draft: comment period closed September 2025; promulgation expected 2026 with a transition period (length not confirmed in draft). Credit providers have a window to implement changes before the effective date.
Getting ready before the regulation is promulgated
The transition period that typically accompanies promulgation of amended regulations gives credit providers time to implement changes. But early adoption carries a specific advantage: an affordability methodology that already incorporates the proposed minimum expense norms is more defensible today (under the current framework and in court or NCT proceedings) than one that relies on low expense figures.
The NCR v Tsoelli 2023 cancellation case was decided under the existing 2015 framework, not the proposed amendments. The lesson is that the NCR applies the existing standards rigorously. Credit providers whose affordability methodology would fail under the proposed norms are likely also vulnerable under the current standards, depending on how far below a reasonable expense floor their figures sit.
Practical steps for compliance teams before promulgation:
- Map current expense figure usage. Document what living expense figures are actually applied in each product’s affordability calculation. Identify income bands where the applied figure is likely below the proposed minimum norm level.
- Model the impact. Run the proposed income-band norm table against a recent application sample to estimate how pass rates change under the amended methodology. This is a necessary input for the board or senior management discussion.
- Review system configuration. Identify all systems, tools, and templates where living expense figures are applied. Plan the update to implement income-band specific norms.
- Separate product classification. If you offer both personal and business credit, confirm that your product categorisation at application level correctly routes applications to the appropriate assessment methodology.
- Documentation audit. Check that assessment records for the current framework are correctly structured. The amended framework requires that the norm band applied is visible in the record. Start building that documentation practice now.
AffyScore’s affordability calculation is built against the Reg 23A framework and applies income-band expense norm floors in the discretionary income calculation. For credit providers who use AffyScore as part of their assessment workflow, the norm enforcement is embedded in the calculation and documented in the decision pack, creating a compliant assessment record before and after the promulgation date.
