The debt counselling farce continues with the latest statement reported in the Business Report:

“Consumers will no longer have to carry any costs of payment distribution following an agreement between the National Credit Regulator (NCR) and credit providers.

“Currently, the cost of distribution is borne by consumers. Once this arrangement is implemented, it will ease the burden on over-indebted consumers,” said the NCR’s Peter Setou in a statement on Tuesday.

Credit providers agreed to carry the costs of distribution at a set fee per amount being distributed, he added.

The arrangement would apply to all proposals received by credit providers after September 1. It would not be applied retrospectively.

In terms of the National Credit Act, debt counsellors were required to register with the NCR. However, a debt counsellor was not authorised to receive consumers’ payments and distribute them to various credit providers.

According to the NCR, the amounts payable for the cost of distribution was a fee of R7 for each payment between R1 and R200 distributed in respect of each credit agreement included in the consumer’s debt re-arrangement plan. This increased to R15 for each payment between R201 and R500 and R25 for each payment above R501. – Sapa”

This report raises more questions then it answers. Which credit providers have agreed to pay the costs of these distribution fees? Surely not all the  credit providers registered with the NCA have agreed to this. How is going operate in practice?

Does an agreement between a group of credit providers and the NCR have any effect in law, I would certainly say no.  There needs to be properly passed legislation in place to make any to make such an “agreement” lawful.

Which bring us back to the main problem, why did the legislators allow this half baked piece of law to be passed in the first place and secondly why are they not now amending it to trying and make the NCA workable, you can’t have agreements and statements from the NCR trying to have the effect of law.