Credit Ombud’s Annual report
The Credit Ombud, the office created to deal with complaints from consumers and businesses that are negatively impacted by credit bureau information or when a consumer has a dispute with a credit provider, debt counsellor or payment distribution agent has released its report for 2011. A copy of the full report can be downloaded here.
A summary of the statistics contained in the report :
Complaints and enquiries received 14 167
calls received by the credit ombud call centre 24 178
Disputes closed by the credit ombud 4 943
average days to resolve a dispute 41,4 days
percentage of disputes resolved in favour of consumers 53%
amount recovered for complainants R2,4 million
Media equivalent advertising value R16,2 million
community workshops 55 in 7 provinces
cost per dispute R1 896
total expenses for the year R9,3 million
Other interesting development in 2011 on the request of the national credit regulator, the credit industry and the debt counselling industry took over managing debt counselling disputes.
The Report said that : “the process that was agreed upon by the industry requires the complainant to first refer the complaint to the National Debt Mediation association (NDMA) or Debt Counsellors Association of South Africa (DCASA). If the complaint has not been resolved after 20 days, the matter may be escalated to our office. In other words, the more intricate and complicated matters that require an in-depth and comprehensive investigation, and the urgent matters where a sale in execution or a repossession is imminent, land up in our office. We finalised 414 disputes for the year. We have the capacity to deal with more matters, but the problem isthat consumers (and possibly some debt counsellors) do not know about the assistance that is available.
It is widely accepted that the debt counselling process had many teething problems and that there were numerous challenges with the process itself as well as the court processes. Fortunately, allthe industry players worked together to address these issues, and agreements are now in place that streamline the process in many of the cases.
Our experience to date highlighted the following issues:
• Terminations as a result of poor administration or where the debt counsellor does not ensure that the correct process is followed.
• A lack of communication between the parties around proposals, counterproposals, the consequences of a credit provider’s rejection of the proposal and termination letters.
• Counterproposals are not communicated to the consumer, resulting in termination, whereas the consumer would have agreed to pay the amount demanded by the credit provider.
• Failure by the debt counsellor to act upon the receipt of the termination notice.
• Pitfalls of the debt counselling process – and the risks – are not explained to consumers.
• The effect of a reduced monthly instalment is not explained to consumers, and the resultant arrears and additional interest and costs come as a shock.
• Failure by the consumer to pay the monthly instalment as agreed.
• Consumers do not notify credit providers of changes of address – and as a result they do not receive the termination letters or section 129 notices, or even the summonses.
• Matters are “left too late” by the consumers before they attempt to find answers or negotiate with the creditors to assist them. Matters are referred to DCASA, the NDMA and the ombud at a very late stage.
There is a big misconception that everyone qualifies for debt counselling, which is not the case, and neither is the debt counselling process a ‘miracle cure’ for a consumer’s over- indebtedness.”