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New deal to help indebted consumers

Nov 11 2010 17:58
I-Net Bridge

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.


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