OVERVIEW OF DEBT COUNSELLING

PRESENTED BY KEDILATILE MALAKALAKA

SAFARI INTO CONSUMER CREDIT

15 OCTOBER 2014

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INTRODUCTION

DEBT COUNSELLING STATISTICS

DEBT COUNSELLING CHALLENGES AND SOLUTIONS

TRENDS AND INDUSTRY PRACTICES

THE CREDIT INDUSTRY FORUM(CIF)

NCR PROJECTS

CONCLUSION

STRUCTURE OF PRESENTATION

INTRODUCTION

The credit industry was large and firmly set in its ways prior to the introduction of the National Credit Act (“the Act”).Over the past six years, the industry has seen many changes and initiatives particularly in the debt counselling space.

Industry agreements were negotiated to address shortcomings in the Act, problems with implementation of statutory provisions and the judiciary has repeatedly changed the debt counselling landscape.

It is against this background that we now have the National Credit Amendment Act.

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INTRODUCTION(continued)

These amendments are intended to strengthen regulation to ensure effectiveness of the NCAA and to fully achieve the intended outcome of a fair, transparent and accessible credit market in South Africa.

For debt counselling, they have placed consumers in a more protected space to efficiently address over-indebtedness and will positively impact the role of debt counselors as the custodians of the process.

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DEBT COUNSELLING STATISTICS

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TOTAL REGISTERED DC’S - 2183TOTAL REGISTERED DC’S - 2183

DEBT COUNSELLING STATISTICS(continued)

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DC CHALLENGES AND SOLUTIONS

CHALLENGE SOLUTION

Loopholes in the Act The National Credit Amendment Act

Process weaknesses We established a forum called the Credit Industry Forum(CIF)to facilitate agreement and address aspects of operational nature which have a significant impact on the debt counselling process. This forum comprise of representatives from the credit industry.

Lack of cooperation between stakeholders

CIF is also aimed at fostering co-operation amongst stakeholders.

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DC CHALLENGES AND SOLUTIONS(continued)

CHALLENGE SOLUTION

Non compliance(At DC and CP level)

Regular compliance monitoring activities

Judicial intervention Engagement with the provincial civil court forums to discuss judicial challenges and to find workable solutions (e.g. Uniform guidelines which if available are disseminated to DCs).CIF is currently working on a solution to approach this at national level.

Consumer behavior Awareness and educational campaigns.

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TRENDS AND INDUSTRY PRACTICE

DCs listing consumers under debt counselling without their consent.

Soliciting of debt counselling applications. DCs buy a consumer list from an unknown source and contact them to offer debt counselling.

The use and sharing of registration number with unregistered individuals.

Misleading marketing by debt counsellors (e.g. advertising that instalments can be reduced up to 50%)

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TRENDS AND INDUSTRY PRACTICE(continued)

Proactive approach to debt counselling by credit providers as a relief measure for consumers.

Consumers making payments using incorrect reference numbers and not following up.

An increase on the number of transfers from one DC to the other.

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THE CREDIT INDUSTRUY FORUM

1.PURPOSE To facilitate agreement and address aspects of

operational nature which have a significant impact on the debt counselling process.

2.COMPOSITION This forum comprise of NCR and Association

representatives from the credit industry. Independent registrants participates by means of

written submissions.

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THE CREDIT INDUSTRUY FORUM(continued)

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3.PROJECTS Task team agreements of 2010-The subcommittee

was established to review recommendations in order to issue as guidelines. The process was finalised and guidelines to be issued in due course.

End balance difference-The subcommittee was established to develop a paper providing a solution on how disputes relating to end balances should be treated. The proposed position paper was piloted with system providers, debt counsellor and credit providers and will be presented at the next CIF scheduled for sign off.

Withdrawal from debt counselling- CIF subcommittee due to differing opinions recommended that NCR seek legal opinion and the opinion was received and deliberated on by the subcommittee on 14 October 2014.

Insurance whilst under debt review: The sub-committee developed a position paper which is in the finalisation phase on the process to ensure that insurance premiums are maintained throughout the debt counselling lifespan.

DCRS- Subcommittee is looking into operational issues as well as the hosting and management of the system with the objective of increasing usage by industry participants.

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THE CREDIT INDUSTRUY FORUM(continued)

PROJECTS BY NCR

Guidelines on the application of section 103(5). Review of industry codes of conduct. Amendment of the current training course for prospective

debt counsellors to include amendments and latest developments.

Exploring ways to extend and register the current debt counselling course as a qualification to benefit both aspirant and registered debt counselors.

Annual DC campaign informed by the latest developments in the industry.

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CONCLUSION

Our vision is to implement and maintain debt counselling as a sustainable debt relief measure that leads to rehabilitation of over-indebted consumers without prejudice. A vision that we cannot achieve on our own but through open dialogue such as this and cooperation by all role players.

We will offer continued support to all role players to ensure that debt counselling is indeed an effective debt relief measure by serving its intended purpose.

THANK YOU

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