Legislation aims to bring lawyers in line with debt collectors on what they charge
Indebted consumers will benefit if amendments to the Debt Collectors Act are passed, a commentator says. The amendments will make the Act applicable to attorneys who collect debt and who currently are not restricted to what debt collectors can charge you.
The proposed amendment to section 8A of the Act reads: “… no attorney, employee of an attorney, or agent of an attorney, shall act as a debt collector unless he or she is registered as a debt collector … The provisions of the Act shall, in addition to the provisions of the Attorney’s Act, where applicable, apply to an attorney, employee of an attorney, or agent of an attorney.”
The implications are that the fees attorneys charge for recovering a debt – which currently do not fall under the regulated debt collectors’ fees – will be capped in line with the caps on debt collectors’ fees. This means that attorneys will not be able to charge you more to collect a debt than a registered debt collector.
“This is of benefit to the consumer, but not to the attorneys,” Advocate Andries Cornelius, the chief executive of the Council for Debt Collectors, says.
The council, which is a statutory body, regulates debt collecting.
Debt collectors can charge a maximum of R910 or the capital amount, whichever is lower. There is no limit on what attorneys can charge.
As a result, you’re better off being pursued by a debt collector than by an attorney. If you are overcharged by a debt collector, you can complain to the council. If you feel you’ve been overcharged by an attorney, you have to complain to the Law Society.
The Debt Collectors Amendment Bill was released for comment by the Department of Justice and Constitutional Development in mid-October.
Cornelius cautions that it is a very wide-ranging change, because many attorneys become debt collectors. If the amendments are passed into law, it would mean that these attorneys would all have to register as debt collectors.
In addition, if the Act is applied to attorneys, they would have to adhere to the debt collectors’ code of conduct. Again, this would be beneficial to consumers, because the code strictly regulates what debt collectors can and cannot do.
Cornelius says no changes have been proposed to the code in the amendments, but there is a “high degree of self-regulation in the industry”.
His office receives about 5 000 complaints about debt collectors’ conduct a year, of which about 70 result in prosecutions. The office can impose a fine on a debt collector guilty of improper conduct of up to R100 000 on each charge.
Debt collection is big business. “It recovers R9 billion each year,” Cornelius says, “which means it is pushing R9 billion back into the economy.”
Once comments have been received, they will be incorporated into the draft bill, which will then go into the parliamentary process before being signed into law. This could take up to a year.
The bill is available on the website of the Department of Justice, www.justice.gov.za. Comments must be submitted by Monday, November 30, to: Ms A Van der Walt The Director-General: Justice and Constitutional Development Private Bag X81 Pretoria 0001; or emailed to email@example.com; or faxed to 086 648 0963.