Cape Town - The Association of Debt Recovery Agents (Adra) has called for a sustainable and equitable solution to ensure that consumers are protected against debt, but also that responsible credit remains part of the economic landscape.The industry body was responding to a statement by the national treasury earlier this month that major retail banks, the Banking Association of South Africa (Basa) and the treasury have reached an agreement to improve responsible lending and prevent households from being caught in a debt spiral. The agreement calls for several measures to be taken, including a review of loan affordability assessments, appropriate relief measures for distressed borrowers, reviewing the use of debit orders and limiting the use of garnishee orders."We would like to state unequivocally that we support the drive to improve responsible lending. We are however concerned about the commitment by Basa members 'not to use garnishee orders against credit defaulters, as they believe the use of such orders for credit is inappropriate'."Since the announcement our members have been inundated with telephone calls from confused and irate consumers demanding that current garnishee orders must be terminated," said Adra. "Basa needs to clear up this confusion as it could have far-reaching consequences for the debt collection industry who recover in excess of R1.2bn per month on behalf of credit providers."Adra defended garnishee orders as a cost effective and efficient process to recover debt, saying that the majority of orders are obtained following a voluntary process in which the consumer acknowledges his indebtedness and consents to a civil judgment and a garnishee order which allows for a deduction from his/her salary in an affordable period time.Adra said the abandonment of garnishee orders may have a potentially disastrous impact on consumers."Garnishee orders have been part of the South African legal process for a very long time and were specifically introduced by the legislature to curb the high legal costs associated with the summons and execution process."Without the ability to use garnishee orders as a collection tool, law firms and collection agencies will be forced to resort to issuing summons and attaching consumers' goods to recover debt. "This is a very costly and embarrassing process for the consumer and will not benefit consumers."The meetings between treasury, Basa members and major retail banks listed several concerns about lending practices by some unscrupulous operators:Excessive lending to households even when such loans are not affordable.Illegal collection practices such as keeping ID documents, bank cards and PINs.Selling inappropriate credit products to maximise margins (example: using expensive unsecured lending for house renovations instead of cheaper mortgage loans).Extending unaffordable loans to pensioners and other social grant recipients.Abuse of consumer credit and asset insurance, including excessive fees and charges.Abuse of debt and garnishee orders, and of direct payroll deductions.Signatory banks have emphasised they do not indulge in these practices.Adra said it is aware of recent reports of debt collectors obtaining fraudulent garnishees, but it has established that these so-called debt collectors are not Adra members and are often not registered with the Council for Debt Collectors.The debt collectors' body urged credit providers to ensure that they use registered debt collectors and Adra members to collect their debt. "Attorneys do not have to register with the Council for Debt Collectors, but are members of the Adra and the Law Society."Micro Finance South Africa also said its members would be severely impacted by the proposed garnishee measure.Adra members recover debts that are not necessarily listed on credit bureaus, but which are part of consumers' monthly expenses and which are not currently considered when conducting affordability assessments. Debts not listed on credit bureaus include municipal services and property taxes, various forms of tax liability, medical expenses, school fees and debt owed in foreign countries."Should this data be used, credit providers will have a much more accurate picture of a consumer’s financial affairs," Adra said.Adra said it believed that the debt situation of consumers and how money is being recovered from them need much more investigation and unpacking to find a sustainable solution for all stakeholders.Last month, the National Credit Regulator announced that the total outstanding amount owed by consumers stands at R1.36 trillion.