Leg­is­la­tion aims to bring lawyers in line with debt col­lec­tors on what they charge

Weekend Argus (Saturday Edition) - - PERSONALFINANCE - LOR­RAINE KEAR­NEY

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 al­van­der­walt@jus­tice.gov.za; or faxed to 086 648 0963.

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