Speedy help for the indebted

Johannesburg - The National Credit Regulator (NCR) has introduced codes of conduct to help speed up the debt counselling process, it said on Tuesday.

"Industry codes of conduct have now been finalised and we believe these will go a long way towards addressing backlogs and improving cooperation between players to finalise debt counselling matters," said NCR CEO Gabriel Davel.

"This will further assist consumers experiencing financial distress due to over-indebtedness."

The codes introduce various voluntary measures to complement the National Credit Act's provisions on the debt review process. It is hoped this will lead to the resolution of more debt review cases.

The codes provide for the standardisation of the content of debt proposals and payment plans, as well as the establishment of an Ombud scheme to resolve disputes.

They also seek to provide clear guidelines for debt counsellors to determine whether consumers can afford to take on more debt.

The codes were recommended by a task team set up in October 2009 to look at ways to get rid of bottlenecks in the debt review process.

The task team also suggested the establishment of a debt review advisory committee consisting of industry representatives. The committee's mandate is to develop, implement and monitor the effectiveness of the debt review process.

It also oversees the implementation of codes of conduct for credit providers, debt counsellors and payment distribution agencies.

Over 200 000 people have applied for debt review since 2007.

About 110 000 cases are under "active" debt review, with an average of 7 000 people applying for debt counselling each month.

The NCR said about 20 000 cases had been resolved through the courts, while 26 000 cases were still on the roll.

"There is a great need for consensual agreements to be reached to ensure that fewer matters go to court on a contested basis, thus causing backlogs in the courts which are already experiencing challenges," said Davel.

Consumer complaints about debt counsellors or credit providers who do not abide by the codes can be referred for mediation to the Credit Ombud.