Pay­ment dis­tri­bu­tion agency or­dered not to ac­cept new busi­ness

Weekend Argus (Saturday Edition) - - PERSONALFINANCE - Laura du Preez ANGELIQUE ARDÉ

The National Credit Reg­u­la­tor (NCR) this week an­nounced that pay­ment dis­tri­bu­tion agency Con­sumer Pro­tec­tion Ex­cel­lence (CPE) may not ac­cept new busi­ness.

Un­less you’re in debt coun­selling, you aren’t likely to know what a pay­ment dis­tri­bu­tion agency (PDA) is.

Debt coun­selling is a le­gal process de­signed to re­ha­bil­i­tate over-in­debted con­sumers. With the help of a debt coun­sel­lor, the con­sumer’s debts are re­ar­ranged – af­ter ne­go­ti­a­tion with their credit providers – so that the con­sumer is able to meet their monthly obli­ga­tions and even­tu­ally pay off all their debts.

Debt coun­sel­lors are not al­lowed to col­lect money from con­sumers and dis­trib­ute pay­ments to their credit providers. Only PDAs ac­cred­ited by the reg­u­la­tor can do this.

PDAs de­rive their rev­enue from a reg­u­lated fee struc­ture as stip­u­lated by the reg­u­la­tor.

They can take three per­cent of dis­tributable in­come (the amount that you spend on debt re­pay­ments) to a max­i­mum of R500 a month. In ad­di­tion to pay­ing your in­stal­ments over to your cred­i­tors, a PDA must also pro­vide monthly state­ments and pay­ment sched­ules to your debt coun­sel­lor and credit providers, as well as at­tend to queries from the re­spec­tive par­ties.

This week, the reg­u­la­tor an­nounced that it will not be re­new­ing its ser­vice level agree­ment with CPE, one of only four ac­cred­ited PDAs in South Africa.

The other three are: National Pay­ment Dis­tri­bu­tion Agency, DC Part­ner and Hy­phen Tech­nol­ogy.

The reg­u­la­tor has given CPE un­til Jan­uary to wind down its op­er­a­tion.

Kedi­latile Malakalaka, the debt coun­selling man­ager at the NCR, says the mat­ter is sub­ject to lit­i­ga­tion, and that it is too early to comment.

If you are be­ing ser­viced by CPE, the reg­u­la­tor says your debt coun­sel­lor must en­sure that your “ac­count” is trans­ferred to one of the other ac­cred­ited PDAs “with im­me­di­ate ef­fect” – and con­sumers would be well ad­vised to make sure this in­struc­tion is car­ried out.

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