Johannesburg - The National Credit Regulator (NCR) has
introduced a new system to standardise the way debt counsellors assess
over-indebted consumers, it said on Wednesday.
"The Debt Counselling Rules System (DCRS) aims to
address concerns of inconsistency in the way debt review proposals are
determined and improve the solve rate of proposals through consent
agreements," the NCR said in a statement.
The NCR set up a task team to look at bottle-necks in the
debt review process and it found that inconsistencies in the programmes used by
debt counsellors to come up with debt review proposals were a problem.
The National Credit Act provides for over-indebted consumers
to use a debt counsellor to apply to restructure their repayments to their
If accepted by credit providers, then the consumer's most
valuable assets will be protected from repossession.
"In the past, there was no standardisation in the way
proposals were drawn up and cases would often end up in court with obvious
negative consequences for both consumers and credit providers," said
Ismail Kharwa, acting debt counselling manager at the NCR.
The rules in the system relate to different formulas used by
debt counsellors to see whether a consumer can be rehabilitated.
Debt counsellors do not have to use the system and credit
providers do not have to accept debt review proposals that have been approved
through the DCRS.
However, it would make it much simpler for credit providers
to assess applications.