The National Credit Regulator responded  to the drafting debacle of the National Credit Act, in particular in relation to its debt counselling provisions, by firstly bringing the High Court application for declaratory order. Subsequent to the order being made the National Credit Regulator has been proactive in December 2009 appointing a Debt Counselling Task Team headed up by former advocate and banking ombudsman and consisting of players from both sides of the fence in Peter Setou, Paul Slot,  Johan de Ridder and Rob Easton-Berry.

The mandate of the task team was to:

• Identify the primary causes for the current backlogs and delays in finalising debt restructuring, as envisaged by the relevant sections of the National Credit Act;

• Propose common standards and procedures which would facilitate the processing and finalisation of applications for debt counselling;

• Establish mechanisms through which credit providers, debt counsellors and payment distribution agents can engage on operational and procedural problems in relation to the implementation of debt restructuring proposals;

• Establish mechanisms through which disputes in relation to specific cases can be resolved;

• Provide regular information through circulars or similar mechanisms to credit providers and debt counsellors on any standard procedures or documentation; and

• Assist and advise the NCR with the objective of implementing an effective debt counselling process, as intended by the National Credit Act.

The task team this month released its interim report which identified 4 broad problem areas:

a. A lack of capacity and delays in the Magistrate Courts, including uncertainty on the interpretation of the

relevant sections of the NCA;

b. Inefficiency and non-­?compliance by debt counsellors;

c. Lack of capacity and administrative delays amongst credit providers;and

d. Problems related to the receipt and distribution of payments by consumers.

The task team concluded that:

“…(we) consulted with all the major stakeholders on a set of detailed proposals. We are encouraged by the level of commitment that has been displayed by both debt counsellors and credit providers in assessing the problems and in developing proposals to deal with the challenges.

Once the detailed proposal have been finalised, this would be submitted to the NCR as recommendations for consideration and implementation.

In conclusion, the Task Team wants to urge all the affected parties to contribute to establishing an effective debt review process, in order to deal with the impact of the financial crisis in a responsible manner, while protecting consumers and minimising any negative impact on the financial sector.”

Read the full interim report.