Cape Town - The Association of Debt Recovery Agents (Adra)
has strongly defended debt collectors and attorneys, stating that they perform
debt collection in a dignified, professional and lawful manner.
The voluntary association of debt collection businesses was
responding to an article Fin24 published on August 6 2012.
In a letter to Fin24, Adra said it believes the "entire
article – “R3bn stolen from employees – expert” – is
a very gross generalisation of the debt collection industry and is not nearly a
true reflection of the way in which debt collectors conduct themselves".
The claim by Summit Financial Wellbeing's Clark Gardner that
"the collectors are becoming more aggressive and less concerned about
recourse as there are few entities challenging their unscrupulous
behaviour", is simply not true and is an insult to the character of the
vast majority of industry participants, the body said.
“The debt collection industry is a multi-billion rand
industry with several hundred million accounts being collected on by debt
collectors and attorneys annually, the majority of which have very large and
sophisticated call centres, which allow them to approach indebted consumers via
a telephone call or sms first before any other action is taken.
"Some never even resort to legal action.
"The legal process is an expensive process, and as such
the majority of the approximately R1bn collected per month in South Africa is
done through call centres."
Adra said it does not deny that there are unscrupulous debt
collectors and attorneys who do not comply with the law, but their records show
that these are the minority of the industry.
The association said that most instances of unlawful
practice occur with companies which are not registered with the Council for
Debt Collectors or the Law Society.
The members of Adra, which was founded in 1988 to help debt
collection businesses render a professional service to their clients and to
establish ethical standards for the debt collection industry, include sole
proprietors, partnerships and businesses employing no more than five people to
organisations which have more than 500 employees.
Adra said it was instrumental in the promulgation of the
Debt Collectors Act, 114 of 1998 in 2003.
The association represents more than 70% of the debt
collection industry, and is recognised by the department of justice and
constitutional development and the Council for Debt Collectors as the only
Adra said that the body - along with the Council for Debt
Collectors - continuously and tirelessly works to rid the industry of
unscrupulous debt collectors. Some of the companies mentioned in the Fin24
article are in fact already being investigated, it said.
Adra also hit back at Gardner's statement that at least R3bn
is being stolen from employees through garnishee deductions, saying it believes
this is a "gross exaggeration, not only because of the fact that
statistical records paint a different picture, but also because Gardner's
statement conflicts with his own website which states that an average of R500
is being over-deducted per order.
"The fact is that numerous employers do not have proper
systems in place and do not cease making deductions from employees' salaries
once a debt has been paid in full - notwithstanding the relevant debt collector
or law firm's repeated communications instructing them to cease making
"Such over-deductions create an administrative
nightmare for the industry and is not the fault of the industry," the
According to Adra, Gardner's statement that "the system
is weak in that it protects the collector, and any recourse from the consumer
requires court action, which the ordinary consumer does not understand and
cannot afford", is incorrect.
“Each debt collector in this country must be registered with
the Council for Debt Collectors, and practising attorneys must be members of
the appropriate law society.
"Each and every aggrieved consumer is free to refer
their grievances to either the Council for Debt Collectors or the Law Society of South Africa.
"Both these entities are skilled, capable and mandated
to handle any complaints from consumers.
"Portraying the debt collection industry in general as
malicious is counter-productive.
"It motivates distressed consumers to avoid their
creditors and/or entities appointed to recover such arrear accounts, resulting
in an unnecessary escalation in interest accruing to the account as well as
costs being incurred in enforcing the creditor's rights.
"In the process consumers incur a negative credit
record, effectively cutting off their access to credit. Ultimately the consumer
bears the brunt."
Adra said it, just like Gardner, has a passion for the
well-being of consumers and for their ultimate rehabilitation.
Meanwhile, Summit said it has certainly seen an increase in
the number of legal breaches among its clients and the collectors collecting
debt from them.
"Our website may well be outdated. It is difficult to
estimate an average. Sometimes we save an employee R100; sometimes we save her
R100 000. Our biggest saving to date was R347 000.
"During the past month or so we had two savings of over
R100 000. We will gladly share this information with Adra.
"At the moment our company saves employees in total
between R300 000 and R400 000 per month, and we receive about 400 new orders
per month. So (our claim of) R1 000 per order may well be about right... and it
is (only) an average," Summit hit back.
Summit welcomed Adra's plans to educate consumers, saying
that it would "gladly meet with Adra to play a part" in the education
Adra said that along with other news websites, magazines,
radio stations and television programmes, it is on a focused drive to educate
consumers about their debt collection rights.
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