National Debt Advisers has a crucial role to play

SINCE its inception, we at National Debt Advisers and collectively as an association of large debt counsellors at the National Debt Counsellors’ Association (NDCA) have been active in trying to engage with the regulator… Whether it be at their office or presenting to MPs in Parliament.

The fact is that we as debt counsellors, and as an industry, speak to this segment of the population every day… Those who earn less than R7 500 per month, with debts less than the R50 000 debt-level, which this bill is targeting.

Repeatedly our association has approached the Department of Trade and Industry (dti) and the National Credit Regulator (NCR) to indicate that the current rules laid out in the debt-review process don’t work for the very poor, and have asked to engage them to define a special process in order to be of assistance.

(And by rules I don’t mean the debt-review process itself.)

Let’s look at the stats and the two directions this can go, if you fall into this bracket:

1. You can afford to pay a reduced payment, if you fall into category 1 of people who can afford to repay – that consumer is most likely to dispute their payments within the first six months. For this reason many debt counsellors set the bar on aiding people who earn R7 500.

The upcoming debt-check movement in the banking industry, which is due to come into effect by early next year is set to change this.

The problem once again is that the NCR changed the Payment Distribution Agency (PDA) payout rules from 14 days to five days. Most disputes happen on day 10, and there has been plenty of engagement on this from the PDA’s to the NCR and the dti.

2. The second scenario is of a consumer who earns less than R7 500, and has a debt-level of less than R50 000.

In this case consumers don’t have the disposable income to be able afford to repay their debts.

This means that consumers who cannot afford to repay their debts, virtually never do.

But with today’s technology used by the larger debt-counselling firms in the industry, one could easily press a few more buttons and send our findings directly to the NCR or the National Consumer Tribunal for a final assessment, thereby saving the taxpayers millions.

We as an industry see this scenario play out every day as we are doing the work, and we are the ones in the front line of identifying these problems. Yet, as much as we are open for engagement and invaluable input to debt solutions in South Africa, it seems our voices are lost in the wind.

Through this bill we are sending a message to a nation which is already living beyond its means, that it is okay to get into debt and not repay it because the government will help wipe it out. That is irresponsible and flies in the face of all the work being done to educate consumers on how to better work with their finances, and rather get out of debt.

Not to mention the fact that South Africa’s fragile economy is also going to be further compromised.

The Debt-Relief Bill should not be simply another piece of legislation used by politicians to score brownie points.

At National Debt Advisers we have seen a marked increase from consumers approaching us for solutions to their financial distress, and we are receiving more and more applications from over-indebted consumers daily.

South Africans are enslaved by debt. The struggle is real. Consumers deserve solutions and options derived from the input of the debt-counselling industry, who were put in place by the NCR in the first place.

Sébastien Anderson is chief executive of National Debt Advisers.