N A T I O N A L C O N S U M E R T R I B U N A L
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-Lenchen Ave North) Centurion
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m THE NATIONAL CONSUMER TRIBUNAL HELD AT CENTURiON
CASE NO: NCT/70/2009/57<1 )(P)
In the matter between:
NATIONAL CREDIT-REGULATOR Applicant
And
ZOLILE SENIOR NJOKWENI Respondent
JUDGMENT AND REASONS
|1] INTRODUCTION
[1.1] The Applicant is the National Credit Regulator (NCR) and the Respondent is Mr.
Zolile Senior Njokweni, a debt counsellor with registration number NCRDC 41,
registered with the NCR in terms of section 44 of the National Credit Act, 34 of 2005
(the Act).
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11.2]-On 10 July .2009 the Applicant commenced proceedings before the National
Consumer Tribunal (NCT) for an order to cancel the -registration of the Respondent in
terms of section 57 ^1) (a) and (c) of the Act on the grounds that the Respondent had
-repeatedly contravened the Act.
11.3] The Respondent was due-to life his answering affidavit on 13 August 2009. The
Respondent faried to file his answering affidavit although he sent a letter to the National
Consumer Tribunal-(NCT) explaining his position. On 24 August 2009 and 3 September
2009 the Acting Registrar of the NCT sent letters to the Respondent informing him of
the correct procedures *to follow in terms ofihe Rules for the-NCT, and advising him that
he should apply for condonation for not complying with the Rules. The Respondent did
not respond to these letters.
[1.4] The Applicant now applies to the Tribunal for a default order in terms of Rule 25 (2)
of the Tribunal Rules.
[2] SUMMARY OF THE COMPLAINT
The complaint is set out in the Applicant's founding documents which included an
affidavit from Mr. Mark Whale, an inspector employed by the Applicant in terms of
section 25 of the Act. Mr. Whale affirmed that he had conducted an investigation into
the business practices of the Respondent and he found that the Respondent was not
following the procedures regarding debt counselling as set.out in the Act and in the
Regulations. The Respondent was also not adhering to his conditions of registration as
a debt counsellor. Before Mr. Whale's affidavit is discussed it is necessary to set out
the applicable law as contained in the Act and the Regulations
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[3] THE LAW
Section 86 of the Act deals with an application for debt review. For the purposes of this
judgement the relevant sub-sections read as follows:
{1} A consumer may apply to a debt counsellor in the prescribed manner and form to
have the consumer declared over-indebted.
_(4) On receipt of an application in terms of subsection (1) a debt counsellor must -
{a) provide the consumer with proof of receipt of the application; and
-(b) notify, in the prescribed manner and form -
/J) all credit providers that are listed in the application;
(ii) every registered credit bureau.
(6) A debt counsellor who has accepted an application in terms of this section must
determine, in the prescribed manner and within the prescribed time -
(a) whether the consumer appears to be over-indebted;
(7) If, • as a result of an assessment conducted in terms of subsection (6) a debt
counsellor reasonably concludes that-
- (a) the consumer is not over indebted, the debt counsellor must reject the
application, even if the debt counsellor has concluded that a particular credit
agreement was reckless at the time it was entered into;
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{b) the consumer is not over-indebted; but is nevertheless experiencing, or is
likely to experience, difficulty satisfying all the consumer's obligations under
credit agreements in a timely manner, the debt counsellor may recommend that
the consumer and -the respective credit providers voluntarily consider and agree
on a plan of debt re-arrangement; or
.(c) the consumer is over-indebted, the debt counsellor may issue a proposal
(10) If a consumer in a default under a credit agreement that is being reviewed in
terms of this section, the credits provider in respect of that credit agreement may
give notice to -terminate the review ...at any time at least 60 days after the date
on which the consumer applied for the debt review.
Further details regarding how a debt counsellor is obliged to perform his functions are
found in Regulation 24 (Application for debt review). The relevant subregulations of this
Regulation read as follows:
(1) A consumer who wishes to apply to a debt counsellor to be declared over-
indebted must
(a) Submitto the debt counsellor a completed Form 16; or
(b) Provide the debt counsellor with the following information :1
(c) Submitto the debt counsellor the documents specified in Form 16
.(2) Within five business days after receiving an application for debt review in terms
of section-86 (1) of the Act, a debt counsellor must deliver a completed Form
This subregulation of Regulation-24 (b) contains a long list of information which the consumer is obliged to provide the debt counsellor
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17.1 to all credit providers thai are listed in the application and every registered
credit bureau.
{3) The debt counsellor must verify the information provided in terms of subsection
(1) above by requesting documentary proof from the consumer, contacting (he
relevant-credit provider or employer or any other method of verification.
(4) in the event that a credit provider fails to provide a debt counsellor with corrected
information within five business days of such verification being requested, the
debt counsellor may accept the information provided by the consumer as being
correct.
(5) A notice contemplated in subregutaiion (2) must be sent by fax, registered mail or
email provided that the debt counsellor keeps a record of the date, time and
manner of delivery of the notice.
(6) Within 30 business days after receiving an application in terms of section 86(1) of
the Act, a debt counsellor must make a determination in terms of section 86(6).
(9) Any arrangement made by the debt counsellor with credit providers must be
reduced to writing and signed by all the credit providers mentioned, the debt
counsellor and the consumer
(10) After completion of the assessment, -the debt counsellor must submit form 17.2 to
all the affected credit providers and all registered credit bureaux within 5
business days.
Chapter 7 of the Regulations deals with record keeping. \n addition to any record that
must be kept in terms of the Act, debt counsellors are required to keep the following
records in respect of each consumer: Page 5 of 13
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(i) application for debt review;
(ii) copy of ail documents submitted by'the consumer;
(iii) copy of rejection ietter^if applicable);
-(Iv) debt restructuring proposal;
(v) copy of any order made by the Tribunal and/or the court;
<vi) copy of clearance certificate.
All records must be 1<ept for a period of three years from the earlier of the date on which
- the debt counsellor created, signed orfeceived the document.2
Section 48 of the Act makes provision for the Applicant to set any conditions on the
registration of a debt counsellor. In line with section 48 the Applicant set out certain
conditions on the registration of the respondent which were accepted by the
Respondent.
[4] MR. WHALE'S AFFIDAVIT
Mr Whale's affidavit is summarised as follows:
[4.1] Mr.-Whale conducted an investigation into the Respondent's business practices on
23 March 2009 following complaints received by the Applicant from three of the
Respondent's clients. These complaints related to the fact that the clients could not get
hold of the Respondent and that, because of this, they were being prejudiced. The
clients continued to be-harassed by their creditors and it did not appear as though the
debt counselling process was proceeding as it should.
2 Regulation 55 (5).
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{4.23 Mr. Whale made telephonic contact with the Respondent and arranged to meet
him at Parliament as the Respondent was working out of an office in the Parliamentary
building. Although the ^Respondent gave an office number and a-teiephone extension
Mr Whale had difficulty finding the Respondent. He eventually contacted Ihe
Respondent on his cellular phone.
{4.3] Mr. Whale established -that the Respondent did not have a permanent office but
operated from any available office in the Parliament. He had closed his own private
office for financial reasons. Mr. Whale requested that he be given some of the
Respondent's client files to examine. The Respondent explained that be kept these
files at his home and so he had to fetch them which he duly did.
[4.4] Mr. Whale inspected 13 fries which were selected on a random basis. These files
contained very little information relating to the debt review process. The inspection
revealed the following:
• in most of the files the forms 16 were incomplete;
• the forms 17.1 were not sent to creditors or creditor bureaux within the required
time periods;
• no records were-kept of the forms 17.1;
• no information relating to the debtors' financial position was kept in the files;
• in none of the files did the Respondent make a determination in terms of section
86(1) of the Act
• there was no-record of anyforms 17.2t>eing sent to any of the creditors;
0 In some instances certificates of balance were received from creditors but the
debt review process remained incomplete;
• in some instances the creditors had terminated the debt review process in terms
of section 86 (10) because no progress had been made and
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' •• the Respondent had not completed the debt review process for any of the clients
under investigation
[5] THE RESPONDENT'S ANSWER TO THE COMPLAINT
Although the Respondent did not file an answering affidavit as required by the NCT
Rules, the Respondent did appear at the Application for Default Judgement. He
•requested that he be given an opportunity to explain his position in the interests of
fairness. The Tribunal granted his request and the Respondent gave evidence on his
own behalf. The Respondent explained that he was a financial advisor who had been
requested by the African National Congress to assist some of its members with their
financial problems. -He confirmed that he does not have an office and for a period of
time he operated from Parliament. He used empty offices in order to conduct his
business. He did not store the client files at Parliament because there was no space to
store them so he kept them at home. He did not have any administrative assistance but
he relied on some of the secretaries at Parliament to assist him. The Respondent
confirmed that the documents which Mr. Whale had set out in his affidavit were the only
documents which were present in the client files on the date on which the investigation
was conducted. The Respondent explained that his intention was to try and assist
people who were in financial difficulty but that his administration was extremely poor.
He acknowledged that he had not followed the-correct procedures but explained that
this was because he was attempting to establish whether clients would be able to avoid
paying their debts, for example, when debts had prescribed or when there was reckless
lending. He further acknowledged that he did not understand the legal proceedings
surrounding the debt review process however; t ie had attempted to seek help in this
regard. He had contacted the Applicant for assistance and he contacted an attorney
who was prepared to assist him. He stated that he had learned a lot from the attorney
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and that he hoped to-formalise -their relationship in the future. The Respondent
concluded his testimony be requesting that he not be punished for his failings by having
his certificate, of registration cancelled, f i e acknowledged-that he had made mistakes in
the past but that fie hoped that he would be able to do better in the future, particularly if
he could continue to work with this attorney.
[6] EVALUATION
The debt counselling process is set out in-detail in the Act (read with the Regulations).
The debt counsellor is obliged to follow certain strict deadlines and he is obliged to keep
a-record of certain documents. Even on the Respondent's own version he has failed to
comply with the Act:
[6.1] The form 16 must be completed properly or alternatively the consumer must supply
the debt counsellor with a comprehensive set of documents. In all the files-examined by
Mr Whale, the form 16 was not completed properly and there was no record in the files
of any documents which consumer may have submitted to substantiate the facts
provided to the debt counsellor. In terms of Regulation 55 (a) a debt counsellor is
obliged to keep a copy of all documents submitted by the consumer.
{6.2] The debt counsellor must inform all creditors and the credit bureaux that the debtor
has applied for debt counselling by sending a form 17.1 within 5 days of the consumer's
application for debt counselling. The debt counsellor must keep a record of the date,
time and manner of delivery of the notice. There are no records in the files that the
forms 17,1 have been sent, when they were sent and how they were sent. It seems
from the Respondent's own version that he did not have adequate facilities to send
these forms and so relied on other people (such as Parliamentary secretaries) for
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assistance. Mr Whale, in his affidavit, reported that one-client explained that she was
told to complete the form herself and send it-to the creditors.
f6.3] The debt counsellor must verify the information which the debtor has supplied to
him by obtaining documentary proof and by contacting the various creditors. Then within
30 days the debt-counsellor must do an assessment of the debtor's financial position
and must make a determination. There is no evidence in the clienteles that these steps
were taken by the Respondent and on the Respondent's own version it appears that the
Respondent did not take these steps. The Respondent explained that in many
instances he did not -receive the information from the creditors which is also why the
process was delayed. However the Act does make provision for such a situation
(Regulation 24(5)) and in order to ensure that he is complying with the Act, the
Respondent should have kept a record of the attempts made and what procedure was
followed if these attempts were unsuccessful. In other instances certificates of balance
were supplied by the creditors but the Respondent failed to follow through with the debt
counselling process. This led to some creditors terminating the process in terms of
section 86 (10).
|6.4] The Respondent did not prepare a determination for each consumer within the 30
day period as required by Regulation -24 <6) and in most instances he simply allowed
the process to fall away without taking any further action such as notifying creditors.
•{6.5] On his own version the Respondent failed to comply with the conditions which the
Applicant had imposed on his registration. In particular the Respondent did not;
• perform debt counselling in a manner which was consistent with the
purposes and requirements of the Act;
• act professionally and he did not provide services in a manner that was
timely;
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• "have access to adequate infrastructure with which to provide debt
counselling services professionally such as a telephone or-fax;
• maintain adequate records and keep relevant copies of documentation in
order to demonstrate compliance with the Act
Taking ali the above into account the Tribunal is satisfied that the allegation that the
Respondent has repeatedly contravened the Act is correct.
[7] Conclusion
The Applicant requested that the registration of the Respondent be cancelled and that
the files of the Respondent's existing clients be handed to the Applicant so that it could
arrange for other debt counsellors to take over the matters. The Applicant also
requested that the Respondent be ordered to refund existing clients who had paid debt
counselling fees. On the other hand the Respondent requested that he be given a
further opportunity to prove that he could provide professional services as a debt
counsellor. In arriving at an appropriate order in this matter the Tribunal takes a number
of factors into consideration:
(1) The seriousness of the contraventions;
(2) The position of the -Respondent; and
(3) The rights of the Respondent's existing -clients.
The Tribunal considers the contraventions by the Respondent to be extremely serious.
The Respondent's failure to keep proper records and his failure io comply with the
procedures set out in the Act place his -clients at serious risk. This was particularly
evident in those matters where the creditors exercised their rights to terminate the debt
review in terms of section -86(10).
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In his evidence the Respondent requested that he not be punished by "having bis
registration cancelled. However, it is not the function of the Tribunal to "punish" the
Respondent. -If the Tribunal was -to accede to the Respondent's request it must be
satisfied that the Respondent was in a position to perform the functions of a debt
-counsellor in a professional manner and in accordance with the purposes and functions
of the Act. Taking into consideration both Mr. Whale's affidavit and the Respondent's
own evidence it is clear that the Respondent not only contravened the Act but that he -is
not in a position to fulfil the duties of a debt counsellor in a manner prescribed by the
Act.
With due consideration io the above, "the Tribunal issues the following order:
[7.1] The Respondent's registration as a debt counsellor is cancelled with effect from 2
November 2009.
[7.2] The Respondent is ordered to prepare a list of all his existing clients and to hand
over their files to the Applicant. The Applicant must arrange for these files to be handed
to another debt counsellor.
[7.3] The Respondent is ordered to repay any fees which he has received from existing
clients to those clients.
Handed down on this 24 t h Day of November 2009
Presiding Member
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— / n * ^ 0 1
Professor B. Durnisa Ms L. Best
Panel Member Panel Member