PayPlanSolutions | Debt Counsellor

Online, October 13, 2013 (Newswire.com) - There are a number of developments in the Debt Counselling industry in South Africa that might change the protection afforded to consumers under the National Credit Act of 2005. The Debt Review process itself has come under close scrutiny from both the Tasks teams that were set up to promote a more harmonious process and alleviate the bottlenecks that occurred, and the National Credit Regulator (NCR) who has focused on issues like reckless lending and affordability. Issues surrounding the garnishee order (Emolument attachment order) abuses have also played a pivotal role in shaping the Industry. Eugene Cilliers from Pay Plan Solutions comments that all the right structures are in place to further the industry. The NCR have made it pretty clear where they intend the industry to be in the not too distant future.

Firstly, there are a number of issues Debt Counsellors will need to be aware of. The compulsory use of Payment Distribution Agencies by Debt Counsellors to distribute their clients' funds to Credit Providers is not negotiable. It works in the same way as trust accounts do for attorney's firms or estate agents segregating the client's funds for their own protection. Responsible repayment plans with clear objectives to get the consumer out of debt are an absolute mandate for the industry.

Eugene adds that the Credit providers also have added duties and responsibilities, including more stringent affordability assessments. The R20 million fine settlement by African bank to the National Credit Regulator is probably a clear indication that these issues are not taken lightly. It is rare that a fine exceeds the capital value of the loans in question.

Eugene has highlighted that even though some clear evidence of abuses have been highlighted in the media, in his opinion, it in no way is an indicator of the general co-operation the industry has seen of late. In fact he stresses that the major lenders including ABSA, Nedbank, Standard Bank, First National Bank, Capitec, African Bank and many more of the recognisable names have all been incredibly co-operative and have made tremendous concessions already in order to try and assist clients who are over-indebted and struggling to pay their bills. Under the previous task team agreements the credit providers have reduced interest rates, stripped out service fees and extended the terms of loans in order to help consumers. The fact that the National Credit Act helps consumers even with secured debt like car and home finance, is a massive feather in the cap for South Africa.