10 years Presentation focus Based on my experience over the past - - PowerPoint PPT Presentation

10 years

Presentation focus

 Based on my experience over the past

(almost) 10 years of debt counselling

 Challenges  Successes  Wisdom acquired

 Not about pointing fingers  Hopefully highlight the progress made,

lessons learned and areas for improvement.

In the beginning…

 “Locking in” of consumers prior to NCA  Debt counselling born on 1 June 2007  Low numbers of DC‟s vs high demand for

debt review

 Lack of consumer education – applying

post summons/judgement

 Lack of responses to forms 17.1 and

proposals

 High volumes of terminations  No court process

Debt Counselling - version 1

 Tighten up living expenses  Subtract living expenses from income  Draft restructure proposals with whatever

amount is left

 4 schools of thought:

 Pro rata based on instalment  Pro rata based on capital amount  Bias in favour of unsecured debt  Bias in favour of secured debt

 Interest rate reductions – zero… prime…

15.5…

Debt Counselling - version 1

 Credit providers to cover PDA fees  Credit providers not to cover PDA fees  Proposal software excluded PDA fees,

credit fees and insurance premiums

 Fees not disclosed on COB‟s -

introduced post acceptance/court order

Debt Counselling - version 1

 Court

 No court process  Continuous postponements  Jurisdiction issues – DC‟s  Forum shopping – CP‟s

 Repossessions  DC‟s and CP‟s making it up as we went

along

Debt Counselling - version 2

 Post declaratory order

 Differentiation between 86(7)(b) and 86(7)(c)

proposals

 Terminations, removal from roll, opposition

 Continuous change to the court process

 postponements

 Moratorium on terminations

 the formula

Debt Counselling - version 2

 Proposals – interest rate reductions

 Adjusted to suit each credit provider

○ e.g. Edcon, Direct Axis, Standard Bank

 Continuous credit provider skirmishes

○ (always the credit provider‟s fault) ○ Court matter opposed – instalment too high ○ Court matter opposed – consent order

application

 Reason for opposition: “the fact that the credit

provider is opposing the application renders it invalid”

Debt Counselling - version 3

 Interest rate concessions

 Understanding this is not a feature of debt

review

 Positive change in attitude towards debt

review from credit providers

 Court backlogs slowly starting to clear  Learning from court decisions

 Understanding our role to be that of an unbiased

3rd party

 Learning that the courts looked at debt review

from a completely different perspective.

Debt Counselling - version 4

 Task Team/CIF

 Voluntary process agreement  DCRS

 DCRS

 did we sell out?

 Terminations & withdrawals

 DC cannot terminate the process but can a DC

reject an application other than per 86(7)(a)?

 Consumer withdrawals post form 17.2 prior to court

• rder

 NCT

 86(7)(b) vs 86(7)(c)  Consumer withdrawals

Successes

 Debt Counsellors

 Less confrontational  Improved cooperation and support amongst each

• ther

 Improved relationships with CP‟s

 Credit Providers

 Improved cooperation with DC‟s  CP‟s going the extra mile to find solutions  More supportive of the industry

○ DCRS

 vastly improved case resolution  greater benefits for consumers

 The Debt Review Awards

Successes

 NCT

 More „in tune‟ with debt review  Awesome turn-around times  Huge effort made to clear backlogs  Allows for an up-to-date DC book

 Consumers

 Improved knowledge of debt review  Applying sooner for help  Reduced levels of indebtedness (NCA

success)

Successes

 NCR/CIF

 A working solution to DHS  Improved complaint management  Solutions to industry problems  Cracking down on unscrupulous industry players

 DC Associations

 Controversial at times  Credit must be given for the huge positive impact

these associations have had on the industry

 Looking out for the DC

 Both of these entities should be credited with

the successes listed under DC‟s and CP‟s

Challenges

 The Paradoxical role

○ Neutral, 3rd party ○ Not the agent nor advocate for the consumer ○ Receives payment from the consumer ○ Is the applicant in court matters with credit

providers as respondents

○ Has to resort to soliciting new consumers ○ Is required to reject an application if consumer is

not considered over-indebted

○ Does not earn any fees from rejected applications ○ The right behaviours been driven?

Challenges

 Knowledge

 DC training inadequate

 Marketing

 DC‟s should not need to solicit business

○ Creates a psychological conflict of interest

 Greater focus needed on consumer

education

○ General ○ Credit provider and credit bureau intervention

levels

Challenges

 The need for dispute resolution body

○ CP cooperation is often dependent on current

policy – policies change.

 Compliance with the law should not be policy

dependent ○ Disputes between DC‟s & CP‟s arising from

differing interpretations of the NCA

○ DC‟s cannot fight court battles against CP‟s ○ Magistrate courts do not set precedent ○ CP‟s have the financial advantage ○ Some examples…

Challenges

 Disputed interpretations of the NCA

○ Section 78(2) ~ c/a’s excluded from reckless

credit

 A CP claims this section excludes developmental

credit from reckless lending assessments. Does that imply that CP is not complying with sections 80 to 82? ○ Section 81(4) ~ the complete defense

 If a CP establishes that a consumer failed to fully and

truthfully answer any requests for information

 AND a court or Tribunal determines this materially

affected the CP‟s ability to make a proper assessment

Challenges

 Disputed interpretations of the NCA

○ Section 86(10) ~ notice of termination

 A CP may give notice to terminate the review… [Section

130(1)(a)] … and may approach a court for an order to enforce a c/a if at least 10 days have elapsed since the 86(10) notice was delivered.

 CP‟s are correctly applying 86(10) but then elect not to

proceed with legal enforcement (as is their choice)

 However, if they do not enforce, they cannot prevent the

DC from referring the matter to court (they may oppose)

• r prevent the consumer from re-applying for debt

review in the future.

 Non referral being used to block a section 86(11)

applications

Challenges

 Disputed interpretations of the NCA

○ Section 88(3) ~ default on order or agreement

 A CP may not exercise or enforce by litigation or other

judicial process any right or security under that c/a until

 The consumer is in default under the credit agreement  And the consumer either defaults on a restructure

agreement or defaults on a restructure order ○ Does this section permit a CP to exit debt review

without obtaining a judgement?

○ Does this section not clarify that a default under a

credit agreement still exists even after a restructure order has been granted?

○ Does a debt restructuring order nullify a pre-

existing default?

Challenges

 Other problem areas

○ Debit order cancellations ○ Credit Bureaux – clearance certificates ○ Section 108

 statements

○ Section 103(5)

 in Duplum  (African Bank has got it right)

○ Section 86(5)

 act in good faith and respond to reasonable requests

○ Section 130(4)(e)

 CP‟s referring matters to court where the c/a is subject

to a restructure order and the consumer has complied with the order

Debt Counselling v5.0?

 A short term, high impact focus on

• perational issues

 A declaratory order to put to rest long-

standing NCA disputes – all of them.

 Consumer awareness and education

campaign

 Development of referral processes from

CB‟s & CP‟s to consumers

 Regulated DC call centre operations  Establishment of DC co-operatives

And finally…

 Respect the role  DC‟s have played a phenomenal role in the

development of the industry

 Retire the phrase “debt counselling was never

intended to be…”

 DC‟s have shown an amazing resilience over

the past 10 years

 As an industry we have a lot to be proud of,

having taken a “poorly written” NCA and still managed to deliver what debt counselling was intended to do – help consumers.