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So much asked from too few NCA Debt counsellors?

6 July 2007 9 Comments

One of the biggest question marks hanging over the National Credit Act, and there are some big questions dangling out there, is the question of whether there are sufficient suitably qualified and registered debt counsellors to deal with the needs of the NCA.

The debt counsellors are an integral element in the debt relief and restructuring procedures of the NCA. The task of NCA debt counsellor is even greater then that of the debt administrator in terms of Section 74 of the Magistrates Court Act, in that their functions cover amongst others:
– initial debt counselling to the consumer
– initiating, negotiating and co-ordinating any compromise offers to all the creditors of the consumer
– drafting legal documents and overseeing applications to court for debt relief
– administering monthly payment from the consumer and distributing these to creditors

Now in order to deal with all these tasks effectively I would submitted that the debt counsellors have to be well skilled in general counselling, financial literacy training, accounting, negotiation skills, financial administration, legal drafting, legal procedure and substantive credit law.

Now those skills are no small ask and currently I believe the educational requirement for debt counselling in terms of the NCA is a matric as well as some form of training from an institution recognised by the National Credit Regulator on debt counselling in terms of the NCA.

So the first question are debt counsellors going to be sufficient trained to deal with their vast and important responsibility?

Previously Mpho Thekizo, project manager: debt counselling at the National Credit Regulator (NCR) was quoted as saying, “We have developed a course and finalised the relevant training material….It is imperative that we start training people as soon as possible because the Act stipulates that from June 2007 there must be debt counselling services easily available to all South African consumers ….For a start we aim at training at least 500 debt counsellors nationwide.”

June 2007 has come and gone and as appears later in this article, there does not appear to be any where this number of debt counsellors available to the public yet.

In order to attract sufficient debt counsellors with such high skill levels the remuneration will have to adequate. Therefore where will these funds come from? One can not burden an already over indebted consumer with charges commensurate with the service provided and the NCA limits charges to a minimal R50.00. So what are debt counsellors being paid and who is financing this? I have asked this question to the NCR and I look forward to their reply of this issue.

I am also awaiting the NCR to answer me on the issue of exactly how many debt counsellors they have out there and how the roll out of debt counsellors is going. Interestingly the NCR website now has a new section which currently details 35 registered debt counsellors.

The demographics of these debt counsellors are:

Greater Johannesburg and Rand: 17
Greater Pretoria and northern Gauteng: 4
Durban: 3
Cape Town: 1
Stellenbosch: 2
Other areas: 8

One can but hope that the roll out of more debt counsellors who are sufficiently well trained and skilled to deal to the demand is imminent.

As an indication of the need of South Africa in terms of debt counselling, their are approximately 17 million credit active consumer in the country and in April 2007 – 111 471 summons were issued out for outstanding debt and a large percentage of those debtors would need or look for debt counselling and its quite apparent that 35 debt counsellors could never deal with the smallest fraction of that number of debtors considering the extent of their tasks in terms of the NCA.

9 Comments »

  • Credit Management SA » Blog Archive » Debt Situation comments from the NCR said:

    […] even 500 is not enough to deal with the debtor situation as I discussed in a post below, there are only 35 registered debt counsellors listed on the National Credit Regulator’s […]

  • Brett Bentley (author) said:

    At interesting report on Business Report on the 12th July 2007 from one of the actual debt counsellors.

    “Having worked for a bank for the past 35 years, Oudtshoorn-based Sarel Fick decided to go into full-time debt counselling after the introduction of the National Credit Act.

    He said it would be ideal if registered debt counsellors were sparsely located, particularly in low-volume areas. The response to debt counselling services had been strong but the absence of a regulated tariff regime was creating uncertainty.

    While the law provided for a R50 administration charge, Fick said this was too low and could cover only telephone calls and fax services.

    However, he was providing services while awaiting the determination of a regulated fee structure.

    He said he was counting on the services of the Debt Counsellors’ Association of SA, which has made representations on behalf of all debt counsellors to the department of trade and industry and the National Credit Regulator on what would be a viable fee structure.

    Fick uses a home-based office and has spent nearly R10 000 to set up his debt counselling business.

    He said a fee of R1 200 a client would be sufficient to keep him in business.”

  • Credit Management SA » Blog Archive » The Mystery of the Missing NCA Debt Counsellors Solved? said:

    […] of the missing debt counsellors appointed in terms of the National Credit Act. Previously I had reported on the anomaly of the fact that the National Credit Regulators office had said that would initially be 500 debt counsellors but that their website only reflects […]

  • So much asked from too few NCA Debt counsellors? « RL Daly Inc. said:

    […] One can but hope that the roll out of more debt counsellors who are sufficiently well trained and skilled to deal to the demand is imminent. As an indication of the need of South Africa in terms of debt counselling, their are approximately 17 million credit active consumer in the country and in April 2007 – 111 471 summons were issued out for outstanding debt and a large percentage of those debtors would need or look for debt counselling and its quite apparent that 35 debt counsellors could never deal with the smallest fraction of that number of debtors considering the extent of their tasks in terms of the NCA. More… […]

  • More Problems beset NCA Debt Counselling | Credit Management SA said:

    […] We previous pointed out the various problems that are plaguing the National Credit Act (”the NCA”) debt counsellors and debt counselling – here, here and here. […]

  • Wayne said:

    I attended the debt counsellours course offered by You & Your Money,an NGO…in late June 2008, wrote and passed the exam on the 30th of June 2008 and had been warned to submit my application-Before I attended the course and wrote the exam as it had been suggested that it would take a while…well, it is now the 10th of August and I still don’t know if I will be registered. I submitted most of my supporting documents at least TWICE, and was repeatedly requested to submit same subsequent to sending in my certificate….as at today’s date there are 422 registered debt counsellors -as per the NCR website and the Tsunami of debt is rising palpably…According to the NCR – Director- “she actually showed me the rising applications…June +- 14500- July – (18th) – +-18500 an increase of 4000 or expressed as a percentage 331% pa…AND Rising….
    How on earth is it at all possible that 422 people(debt counsellors) will be able to cope with these numbers – I estimate – given the available figures – approximately 198 000 indebtedness – section 129 applications for the year – divided by 422 registered counsellors = 469 per counsellor – NOT taking into account the regional areas….obviously major cities will have more counsellors – therefore an unequal distribution in dealing with the numbers…obviously higher in rural areas given the current economic environment.
    Processing an average of 1.29 applications per day, at an initial fee of R 50.00 per application, ( and waiting for up to three(3) months for your first fee payment (on acceptance by the creditors and the magistrates court) how will the debt counsellor themselves avoid becoming indebted?

    The maximum fees are prescribed and don’t amount to much given the massive amounts of paperwork involved, the psychological stress of dealing with the clients and their personal issues, the aggravation and obfuscation on the part of the creditors…( I’ve had dealings with two major banks as a Financial Advisor( licensed) when assisting only two clients so far….overwhelming!!!
    Any suggestions? 1)How to speed-up the NCR 2) Fee structure and waiting period 3) The employment of extra staff – needing to be trained and PAID..on a monthly basis…4) Perhaps subsidisation of setting-up expenses by a government fund – ( NCR ) – low-interest loans etc…
    Ideas for the above….?

  • MOIRA said:

    In order to register the NCA requires the person not to be black listed. I believe that it is only through a bad experience that you can offer assistance to others.

    I am sure many people would register if not for this requirement. Why is the NCA not regulating the price of the courses as this is also a stumbling block.

  • MOIRA said:

    Why is the NCR not assessing future Debt Counsellors before allowing them to do the course.

    Image spending R4,500.00 on a Debt Counselling course and then not being accepted by the NCR.

  • carl said:

    I am doing the course in July.Are there still delays in getting registered?

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