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Overview of Debt Counselling in South Africa

Learn about the purpose, registration, statistics, support, challenges, and proposed solutions in debt counselling under the National Credit Act.

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Overview of Debt Counselling in South Africa

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  1. BY : OBED TONGOANE, CHIEF OPERATIONS OFFICER 13 AUGUST 2013 PRESENTATION ON DEBT COUNSELLING IN SOUTH AFRICA

  2. The purpose of the Act Debt Counselling: A mechanism for over-indebtedness Registration of debt counsellors Debt Counselling Statistics Support and Promotion of Debt Counselling Challenges Proposed solutions Content

  3. The purpose of the National Credit Act is, amongst others, to protect consumers by:- Promoting responsibility in the credit market by- (i) encouraging responsible borrowing, avoidance of over-indebtedness and fulfillment of financial obligations by consumers (ii) discouraging reckless credit granting by credit providers and contractual default by consumers Addressing and preventing over-indebtedness of consumers and providing mechanisms for resolving over-indebtedness based on the principle of satisfaction by the consumer of all responsible financial obligations THE PURPOSE OF THE ACT

  4. The National Credit Regulator is requited to register credit providers, credit bureaux, and debt counsellors Main role of a debt counsellor is to assist over-indebted consumers Debt Counselling: a mechanism for over-indebtedness

  5. Only natural persons may be register as debt counsellors Must have grade 12/Matric certificate Two (2) years relevant experience in business environment, legal, counselling, complaints handling Have completed a debt counselling course Have ability to manage own financial affairs No criminal records Registration of debt counsellors

  6. REGISTRATION OF DEBT COUNSELLORS cont. Total no. of registered debt counsellors as at end July 2013 is 2013 Geographic LocationProfession Race Gender …..142 …..74 …..1010 …..222 …..46 …..67 …..79 …..14 …..359 …..2013

  7. DEBT COUNSELLING STATISTICS • Since inception to June 2013, 422 624 consumers applied for debt counselling. • 82 964 consumers applied for debt counselling during 2012/13 financial year. • An average of 9100 consumers apply for debt counselling per month. • PDA’s distributed R2.96 billion to credit providers in 2012/13 • Since inception R10.6 billion has been distributed to credit providers

  8. SUPPORT AND PROMOTION OF DEBT COUNSELLING • 573 monitoring conducted in 2012/13 • Objective is to monitor compliance with the Act, condition of registration, NCR guidelines provide guidance and support • Six (6) provincial debt counselling workshops: were conducted in Limpopo, Free State, Eastern Cape, North west, Gauteng and Kwa-Zulu Natal. • Meetings with Law Societies to assist where possible with free legal services • Workshops for magistrates are ongoing. • Circulars and public notices are issued on a regular basis to provide guidance and advise to the industry and consumers • Debt counselling awareness campaigns – targeting government employees were held with Mpumalanga Department of Education, Kwa-Zulu Natal Department of Finance, North west Department of Economic and Development Affairs.  • Roll outs to other government departments underway.

  9. Court processes: no uniform views by magistrates Credit providers terminating despite court orders being in place Legal fees Cooperation between credit providers and debt counsellors Challenges

  10. Workshops with Magistrates This is being addressed by the current Bill amending the NCA Engagements with Law Societies to assist where possible Stakeholder engagements and possible conditions of registration compelling cooperation PROPOSED SOLUTIONS

  11. Thank You

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