The role of debt counselors (DCs) in the community
In this week’s blog we at Debt Centre want to share our independent views regarding the matter of a certain DC who reached the latest news headlines. She had her registration as a DC cancelled by the National Credit Regulator Tribunal (NCRT) for serious and repeated breaches of the law.
A rogue DC who reached tens of thousands of debtors in South Africa through a call centre operation has been fined R1 million for abusing consumers’ funds. More than 3100 consumers have complained that their credit providers terminated their debt review processes. That was because of this DC’s failure to perform her duties in line with the National Credit Act (NCA). Others complained of being placed under debt review despite never having applied for or consented to debt review in the first place.
This DC’s company was found guilty of 14 contraventions of the NCA and the NCRT deemed this sufficiently serious to justify cancelling her registration as a DC and punishing her with the highest administrative fine that it can impose.
The NCT found that this DC has allowed people who were not registered DCs to pass themselves off as call centre agents, rendering services which she ought to have attended to herself.
The NCRT also found that she had ignored her obligations in terms of the law and was able to do so “because she operated in an environment in which consumers were ill-educated about their rights and were unaware that her practices contravened the act”.
This problem is not an isolated matter as there are other debt counseling companies (DCC’s) being investigated for the same illegal practices nationwide. Consumers need to be made aware of scammers and fraudulent operations that are out there only to take their money, even though they are registered.
We will take an in-depth look at the situation and how we can educate and ensure our readers of the importance of the rules of conduct regarding the legal processes DCs must follow, managing the debt of their clients.
Debt stress leads to vulnerability
Heavily indebted consumers often have to place their trust in DCs and are unaware of the processes their applications and debt restructuring must undergo. So, they usually leave it to the professionals, believing that they are registered with the NCR and that they have their best interests at heart.
So, when you receive a call out of the blue about your debt, the first reaction is to end the conversation before it starts, but the person at the other end says all the right things and asks all the right questions – raising debt issues that had you concerned at high stress levels for a long time.
You decided to trust the well-spoken call centre operator and share your personal details in order to check on your credit score. As the operator reveals highly sensitive debt information about you, you decided to consent to apply for an assessment and a debt review application.
After everything had been explained to you over the phone – irrespective whether you paid attention to the options and conditions or not – before you know it, you are listed under debt review and expected to trust the company to handle all the paperwork and legal processes so that you can get your creditors off your back.
The rogue DC charged her call centre operators with persuading unaware consumers that they are indeed over-indebted or listed on debt review without their knowledge. It is easy to fall into the trap of such a system when you as the consumer are unaware that the rules and processes were not legally followed.
As a consumer you have rights and you should be directed to and be well informed by a legally registered DC of every step of the debt assessment regarding your status, the legal implications and the court proceedings that might follow.
A DC is not allowed to appoint unqualified personnel to fulfill the duties of a DC. The normal practice is to use a legal network system known as IDOX to do the assessment and to determine the results. It is a conduct rule that a DC must consult with the consumer directly, and to do a proper manual assessment to ensure the consumer is over-indebted and whether they can afford a formatting payment plan.
Legal duties of a DC
A registered DC should at all times disclose their details and verify their DC number at the NCR, with their clients. Every DC registered with the NCR must have a valid registration certificate displayed on their premises. The DC must be present at the office and be available in the aftercare admin to ensure that their staff are monitored and the quality of their service is professional and within the rules of conduct.
The aftercare service of the consumer’s applications is vital to ensure that the creditors are served with the debt review application notices in due time. The admin should open a file for the consumer and keep track of the timelines and ensure all payment processes are followed. The application must be referred to court for registration within specified timelines as per law, whereas the DC has to ensure that all applications in processing are closely monitored.
The DC has a duty to determine if the consumers are over-indebted or not. Placing consumers randomly under debt review is illegal. Consumers should be informed of their rights on what can be expected when entering the debt review program. The process for an application is often misunderstood and that is why it is so easy for rogue DCs to take advantage of destitute consumers who are desperate for help.
Only a registered DC may rule that you are over-indebted
What you should know about the application form:
- The call centre agent is not allowed to conclude and finalise the payment plan with the applicant.
- Only the registered DC may contact the consumer to verify income, expenses and household expenses to ensure the repayment plan is affordable.
- The DC has to explain the payment plan to the consumer.
- The DC has to explain the DC’s fees and the relevant legal fees.
- No DC may collect fees up to 5 or 6 months.
- The consumer must pay the DC fee in the 1st month, then the legal fees in the 2nd
- Only the DC can explain all other statutory fees to the consumer and make sure they understand it all.
- Once the consumer consents, the DC must send the application back to him or her.
- The consumer / applicant must receive the Form 16 application pack.
- At this point the consumer has to accept the quotation first.
- The consumer must sign the application to be valid.
- The consumer cannot send an empty PDF scanned document with a signature to be used for an application form.
- It is unlawful to be placed under debt review without the applicant’s full consent and understanding.
- No DC may collect any fees if the consumer had not accepted and signed all the relevant documents, the consumer must be listed with the NCR DHS data system of applying for debt review.
- The DC should issue the consumer with a formal receipt of the debt review being approved.
- The DC should issue the consumer with a welcome letter that must also be accepted and signed.
- No debit order may be loaded on the consumers bank account without their consent / mandate.
The role of the consumer
When you are dealing with a Debt Counselling Company, a registered DC has to adhere to certain rules. He or she should never ignore the consumer’s rights and his or her primary duty is to protect the client’s assets. It is always a good idea to check on the NCR register of registrants and on the “Hellopeter” website’s consumer complaints platform, to see whether the consumer is complaining about the company or its staff.
Consumers should be part of the ongoing process, as it is their money and their debt. Non-participants always complain when they get hassled by their creditors during the debt review program or when the creditor terminates the contract. The most common reason for termination is when the matter was not referred to court within the 60-day limit.
Consumers need to understand the importance of ensuring they receive a monthly payment distribution statement and keep track of their debt review application progress. When they cannot afford the contractual payments restructured by a DC or a mediation agent, whichever product is applicable to the matter on merit, consumers need to know the contract remains between them and the creditors, and it must be honoured to avoid termination.
The DC remains the third party by virtue of mandate to restructure the accounts of the debtor and motivate the consumer’s financial situation to the creditors, the court or NCT. The creditors have the right to terminate the debt review proposals when the matter is not referred to court or the NCRT in due time.
Your credit report
Consumers should check their credit report to ensure they were not listed under debt review by a DC when they know they did not sign any consent or application form. Once this is detected it should be reported to the NCR.
At Debt Centre you are in good hands
We have a communications centre where our highly trained and monitored staff contact consumers to verify if they need help. All our calls are recorded, as we have to send the recordings to the credit bureaus to prove that the consumer did consent our access to their credit report details.
We have four DCs available at all times. They will ensure the consumer receives the assistance to the debt review products and to verify the consumer’s over-indebtedness. The call agent will collect all the information for the DC and request the consumer’s documents for the verification of information and FICA purposes.
Our clients receive the best assistance on the merits of every application, controlled with personalised consumer verification processes to ensure that there are no risks of fraud or consumers claiming that they did not know of such applications.
It is the body to whom consumers can complain when their DC is not doing what he or she is supposed to do. No consumer should lose their assets due to the misrepresentation of rogue DCs and unregistered call centre agents or unregistered debt counselling companies..
Here at Debt Centre we know that consumers are vulnerable, therefore we will continue to write about issues in the industry. We hope the people who need help will find it in our blog articles. We value our clients’ needs and we will protect and serve the rights of all our consumers against rogue and fraudulent operators.
Personal message from the author, Annienne Nel
I hope you found this article helpful and informative. I know consumers face financial hardship, so, may God be with you and bless you and your families.