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New deal to help indebted consumers Nov 11 2010 Johannesburg - With credit-related court backlogs still sky high and 47% of credit active consumers in arrears, industry players on Thursday unveiled a comprehensive set of voluntary measures to streamline the debt review process. The task team was set up by the National Credit Regulator a year ago after the National Credit Act and its debt counselling programme came into effect three years ago. Proposed measures include greater transparency between credit providers and debt counsellors, as well as revised repayment terms for overindebted consumers. These terms have been agreed at industry-wide level - a serious compromise by the banks which have until now opposed every case. According to Paul Slot, spokesperson for debt counsellors, such a quick turnaround to a uniform industry-wide system is an "SA success story", as some other countries have taken 10 years to get the system implemented. The challenge now is to get more debt-stressed consumers to enter into the process to alleviate their plight. There have been 220 000 applications for debt counselling by consumers, yet 9 million are in arrears. "This solution is a fantastic opportunity to get out of trouble a lot quicker, but it will need a mindset change," said Slot. It is believed the expansion of the voluntary (industry-funded) debt counselling dispute mediation capacity of the National Debt Mediation Association for disputes between consumers and credit providers will also go a long way towards improved cooperation by credit providers. It will also help ensure that disputes are dealt with. While 20 000 cases have been resolved through the court system, a further 24 000 are currently on the court roll. It is now hoped more cases will be resolved on a consensual basis once the task team's proposals have been implemented. Some revised measures are currently being implemented, while others are due for implementation during 2011. ------------------------------------------------------------------------------------------------------------------------------------------------------ An estimated 47% of credit-active South Africans are in arrears with their repayments and the huge backlogs in the country’s courts are delaying the legal processes and preventing judgements against credit defaulters from being granted. The proposed measures include greater transparency between credit providers and debt counsellors along with revised repayment terms for over-indebted creditors. The National Credit Act came into effect three years ago and it was aimed at streamlining the legal processes through a debt-counselling programme and preventing over-indebted people from taking on new debts until the previous contracts had been settled. Now a task team, appointed by the National Credit Regulator a year ago, has come up with a set of proposals aimed at more rapidly resolving credit disputes that face people who have chosen to enter the debt counselling process. Paul Slot, spokesperson for debt counsellors in South Africa says the challenge is to get more distressed consumers into the debt counselling process in order to alleviate their plight. Slot says that at least nine million consumers are in arrears with their accounts in South Africa and yet only 220 000 people have applied for debt counselling. “The challenge is to get more debt-stressed people into the system,” he says. The National Debt Mediation Association says it has expanded its capacity to deal with debt counselling dispute mediation in an effort to more speedily resolve disputes and work out a repayment plan for debt-stressed consumers. Slot says that the Mediation Association hopes that the establishment of this association will mean that disputes can more rapidly be resolved on a consensual basis so that the backlog in disputes is cleared. There are currently 24 000 credit-related cases on court rolls throughout the country and Slot says that this number is certain to increase as more and more consumers find that they are unable to meet their financial commitments. 08 Oct 2010 Banks are being encouraged to help credit defaulters to join debt counseling programmes and if they do so, they will be given additional time to find a solution claims Shiraaz Hassan, marketing and sales director of Asrin Property Developers.  He says that while implementation of the Consumer Protection Act has been delayed until March next year, it will still have some significant spin-offs for residential property development. “As I understand the Act, any person involved in a property transaction, including the estate agent, can be held responsible for any defaults or defects that might occur on the property within the first six months,” says Hassan. “If a buyer can show that certain aspects of the sale were not made clear then the buyer will be entitled to compensation regardless of what the sales documentation reflects,” he warns. Hassan says that this means there is a responsibility among all agents to make certain that the buyer knows exactly what he or she is buying and what they are agreeing to. He says the National Credit Act, the new Companies’ Act and the Consumer Protection Act place greater importance on protecting individual rights. Hassan says that while the Consumer Protection Act will protect buyers to a much greater degree than before, he does not expect it to hamper residential sales in the way that the National Credit Act slowed the credit extension market. _______________________________________________________________________________________ INCREASE IN SUMMONSES FOR DEBT – STATS SA Statistics SA says that civil summonses issued for debt have increased, according to a report in The Citizen. It said the total number of civil summonses issued for debt for the three months ended August 2009 increased by 16.1% compared with the same period last year. The major contributors to the increase were civil summonses issued in respect of promissory notes, credit cards and other acknowledgements of debt (5.7 percentage points) money lent (4.6 percentage points), goods sold on an open account (2.4 percentage points) and ‘other debts’ (2.2 percentage points). _______________________________________________________________________________________ Credit bureaus create consumer credit profiles based on credit information received from credit providers on a monthly basis. The National Credit Regulator regulates and monitors these registered credit bureaus and the quality of their data. As at June 2009, credit bureaus had records for 17,79 million credit-active consumers: The percentage of consumers in good standing was 55,9%, a decrease of 1,7% when compared with quarter ended March 2009 and a decrease of 4,5% when compared with quarter ended June 2008. The number of consumers with impaired records continued to increase to7,85 million at the quarter ended June 2009. This implies deterioration in the credit records for 390 000 consumers in comparison to the last quarter and 1,06 million year-on-year, reflecting a further increase in the level of debt-stress. The trend of the consumers with impaired records has been on an increase since 2007. There were 121,46 million enquiries made on consumer credit records during the June 2009 quarter. This was an increase of 23,4% quarter-on-quarter. Of the total enquiries made on consumer records, enquiries from banks and other financial institutions accounted for 39,4%, enquiries from retailers accounted for 14,2% and enquiries from telecommunications providers accounted for 23,7%. The number of credit reports issued to consumers increased in the quarter ended June 2009, with 33,662 free credit reports being issued, an increase of 9,8% quarter-on-quarter. A further 5,288 credit reports were issued with charge. In the quarter ended June 2009, 7,072 disputes were lodged in relation to the information on consumer credit records. This was a quarter-on-quarter decrease of 15,5% and a year-on-year decrease of 28,8%. Issued by: Bullion Pr & Communication _______________________________________________________________________________________
(Data Source – Consumer Credit Report, Quarter 2, 2008) _______________________________________________________________________________________ Women find it harder to admit to debt than men. Research by debt counsellors, Consumer Assist shows that when evaluating more than 20000 client files, men were far more likely to go for help than women. “Close to 58% of clients are men - with white and black African men more likely to seek help than those of mixed race (coloured). Coloured men were half as likely to go for help as white men and a third less apply for debt counselling than African men. However, those of Asian origin are the least likely to seek help with only five percent of those on our books Asian men,” Andre Snyman, CEO of national debt counselling organisation, Consumer Assist said. “White women are a third more likely to seek help when they are under financial stress than black African women, however, Coloured women, although they are less likely to seek help than black African women, follow not far behind. And Asian women are the least likely to seek help with only four percent of women requesting debt counselling being of Asian descent.” Snyman said they had yet to delve further into the reasons for the differences in applications, “however, our debt counsellors have told us that single women, especially those who are single parents are more likely to apply for debt review. However, very many women are under debt review because they are married in community of property. “The Asian community is very good about assisting each other either through relatives or religious organisations and this may be why fewer people from Asian communities come forward for assistance. “What these figures tend to indicate however, is that far more awareness needs to be created in black communities about debt counselling and how it can work for them. White people apply for assistance in far greater numbers than their demographic profile would suggest. And too with 40% of children growing up in single parent households, usually with a mother and with high rates of maintenance defaulting, it is surprising that women are less likely to come forward for help than men.” Snyman suggested that debt counselling campaigns needed to apply greater emphasis to education programmes in black communities and among women. “August is women’s month and we at Consumer Assist will place particular emphasis on trying to educate women through financial wellness courses at companies and through our debt counselling branches on the importance of seeking help with debt before lawyers’ letters start arriving. “We hear tragic examples of mothers not sending children to school because they cannot afford school fees or school uniforms, or houses being taken away from mothers because they have not been able to keep up bond repayments. “I have one example of a couple that got divorced after being married in community of property. She did not change the ownership of the house as per the divorce agreement to show that she now owned the house. R264000 is owed on the house, but because the ex-husband is now in financial trouble creditors are trying to take away the house from her and her legal position is difficult because the house is still in both names.” He said that one factor that might see married women less likely to come forward, “is that they often don’t want to reveal how over-spending or poor budgeting may have seen a crisis emerge with the family finances. Debt counsellors frequently have to mediate very heated discussions between spouses and often we will encourage them to go for marriage counselling while we are helping them to sort out problems around debt.” Snyman said too that while many faith communities had attempted to help families meet financial shortfalls by providing groceries, assistance to pay light and water bills, school fees or rent, “many are becoming so overburdened by demands within their communities – and these range from the previously rich to the poor – that they too can no longer cope.” He gives basic tips to assist those with financial difficulties to cope:
(BizCommunity) ______________________________________________________________________________________ "Task team to solve debt review challenges" The Task Team on Debt Counselling has been set up by the National Credit Regulator (NCR) to provide solutions to the bottlenecks in the debt review process. The task team will initially focus on ‘quick wins' and is anticipated to have a lifespan of about six months. The task team comprises of Peter Setou, Paul Slot, Johan de Ridder and Rob Easton-Berry and is chaired by Advocate Neville Melville, whose experience as former Banking Ombudsman and dispute resolution expert is seen by the NCR as critical in mediating between the different parties. Marlene Heymans (NCR) and Marissa Erasmus of the University of Pretoria Law Clinic assist the team. Identify primary causes of current backlogs and delays in finalising debt restructuring Propose common standards and procedures, which would facilitate the processing and finalisation of applications for debt counselling Establish mechanisms through which credit providers, debt counsellors and payment distribution agents can engage on operational and procedural problems with the implementation of debt restructuring proposals Establish mechanisms through which disputes in relation to specific cases can be resolved Provide regular information through circulars or similar mechanisms to credit providers and debt counsellors on any standard procedures or documentation Assist and advise NCR with the objective of implementing an effective debt counselling process, as intended by the National Credit Act. "While it was to be expected that there would be teething problems in implementing the National Credit Act (NCA), the only one of its kind worldwide, we decided we needed to act decisively to bring the situation under control," said Gabriel Davel, the CEO of the NCR. Below is a list of current live news articles. These articles are provided courtesy of Fin24.
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