April 2009

On the 16^th and 17^th of March 2009 Compuscan Academy attended a 2 day SAFARI into Debt enforcement. This was held at the Protea Hotel in Midrand where hotly contended issues of The National Credit Act and other related topics such as debt counselling and consumer concerns were addressed.

As more and more South Africans have started to default on their financial obligations due to a looming economic recession, this has created more strain on credit providers and has exacerbated the problem of debt collection and enforcement. The National Credit Act (NCA) has been enforced to radically improve progressive business practices apart from many other reasons. A discussion forum at the conference involved attendees whereby they could raise their concerns and discuss the impact of the NCA as well as other new relevant legislation such as the Magistrate Court Act.

Stakeholders attending this Safari included both small and large Credit Providers, Attorneys, Advocates, Debt Collectors and Debt Counsellors.

Key Guest Speakers included the likes of:

• Gabriel Davel and Adv Jan Augustyn from the National Credit Regulator (NCR),
• Adv Jasper Noeth - Chairman Debt Collectors Council,
• Chief Magistrate Cheryl Loots - Rules Board,
• Tony Richards - Chairman of the Debt Counselors,
• Hannatjie Pienaar - PDA (CPE),
• Manie van Schalkwyk - Credit Ombud,
• Johan de Ridder - NDMA

Topics that were discussed included the following:

• The interpretation of the legislations on debt collection and enforcement
• Constraints within the legal processes
• Unacceptable behaviour by various role players in the credit industry
• Consumers interests and their education
• The growth of debt and defaulting by consumers
• The "spirit" of the National Credit Act

Some alarming statistics were shared during these discussions. It is estimated that doubtful debt in South Africa is round about R180 billion. Debt review applications according to the National Credit Regulator (NCR) increased in one year from 6,148 in January 2008 to 44,133 applications in January 2009 with only 1,5% - 2,5% of these application having reached a court decision. There is still much to be done.

It was evident that the credit industry as a whole needs to work on a more pro-active approach towards managing debt and be involved in an intense focus on consumer education. Cooperation from all parties and the willingness to make compromises is necessary to assist with this growing concern.

Some unique solutions were also mentioned to assist consumers during debt review:

• Voluntary auction programmes were introduced by ABSA for mortgages under stress.
• A cheaper short term insurance option for hire purchase agreements.
• The National Debt Mediation Association (NDMA) has been established as a way to combat over-indebtedness of consumers.

In closure to the discussion, the following mandate was decided upon:

1. To gather all relevant information in the industry to avoid duplication in order to look at a possible industry code, Ombud and an alternative dispute resolution mechanism
2. To ensure that the industry is ready for the Consumer Protection Bill to be enacted later this year and
3. To streamline input to role-players in the industry on "generic" issues as to have a stronger and combined voice.

We are thankful for having been allowed the opportunity to attend with valuable conference which has vastly contributed to the substantial knowledge on debt enforcement.

Compuscan Academy hosts a course specifically related to Effective Debt Collection under the NCA. The course familiarises learners with the changing debt collecting arena in retrospect to the impact of the National Credit Act on Debt Collecting Activities. Furthermore learners will be introduced to legislation regulating documentation and will include all the aspects in the recovery of debt.

Should you have any questions or comments that you would like to share with us about the above article please do not hesitate to contact us on Tel: 021 888 6000 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it .