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Voluntary debt mediation contravenes act

Aug 27 2012 15:53 I-Net Bridge

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Johannesburg - The Debt Counselling Industry portal (DCI) on Monday welcomed findings by the National Credit Regulator that the voluntary debt mediation solution touted by National Debt Mediation Association (NDMA) contravenes the National Credit Act.

The DCI is a communication platform for major players in the debt counselling industry‚ while the NDMA is an organisation created by the local credit industry to provide debt mediation services.

The finding requires the NDMA to stop the pilot scheme for its voluntary debt mediation solution and provide written confirmation of its cessation by Tuesday.

The finding followed a complaint lodged by DCI founder Deborah Solomon‚ that the mediation solution was a Banking Association of South Africa (Basa) initiative that prejudiced consumer rights and potentially favoured credit providers while purporting to be a service to assist those in debt.

“The regulator’s finding that this scheme contravenes the NCA is a victory for the consumer and debt counsellor‚” Solomon said in a statement after the ruling.

“For months‚ the NDMA has punted the benefits of its so-called ‘solution’ and certain banks have encouraged indebted individuals to go through these processes knowing their pilot scheme had not been approved by the regulator‚” she said.

Solomon said that in effect‚ the NDMA and banks “tried to circumvent the provisions of the NCA”. She said: “They promoted a scheme that was supposedly beneficial to the public when the scheme compromised consumer rights.”

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