New system to standardise debt review
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.
...great news, but still think the NCR and the financial sector need to do more marketing here. Consumers are under the impression that they can apply for Debt Counselling when they receive their first 'letter of demand' or 'attachment notice'...but in actual fact, by then, it's too late...
Another piece of bad legislations bites the dust. Currently debtors have again been sold a bill of goods by this process and will keep on losing their possessions. Coupled with incompetent magistrates, lazy clerks of the court and sheriff's of the court who are useless the legal process is impaired beyond being rehabilitated.
Fact is that the levels of bed debt have not been reduced and have stayed more or less the same for the last forty years that I have been granting credit.
Should the government be serious about fixing this problem they must legislate rules around who may receive credit. Start at the point of departure not when the wheels have come off.
The NCR has served to increase the levels of debt a consumer faces because of the methodology of calculating finance charges. They would have done better to peg the finance charge rate at three percentage points above prime and extended the repayment period to a maximum of sixty months for debt above R25,000.00.
So now after 73 years in business we will close our doors soon and because of all the stupid legislation that this government has introduced. The worst being their inability to understand that work creation in our country is being seriously hampered by uncontrolled importation of goods that we should be producing.