Tribunal Dismisses Application By Regulator To De-Register Debt Counsellor
During the time period leading up to the collapse of African Bank, Debt Counsellor Deborah Solomon was very vocal about the risk of an unsecured credit “bubble”. This was met with a lot of nay saying by various parties and credit providers, as they tried to shore up an unsustainable push of unsecured credit into the SA market. During this time, an investigation was launched by African Bank into irregularities at one of it’s branches.
Once identified, they reported the matter to the National Credit Regulator (NCR) who proceeded to launch an investigation of their own. At the conclusion of the investigation, the NCR asked for a huge fine due to reckless credit granting. The words reckless credit make all credit providers concerned almost as much as do the words R300 million fine. The matter went before the National Consumer Tribunal for a while before a settlement agreement was reached between Bank and Regulator.
All of this preceded the sudden departure of the African Bank leadership and publishing of reports which revealed that customers were simply not paying back all the money they had borrowed. Share prices began to plummet and eventually went into free fall, bring to an end African Bank as we knew it.
A Debt Counsellor Speaks Out
One Debt Counsellor spoke out about what could have been done sooner by all parties, including the NCR, to prevent matters like this from coming about. It called the reduction of the proposed fine (R300 million down to R20 Million) a slap on the wrist. Deborah Solomon, a Cape Town based Debt Counsellor who was well known at the NCR for having forced their hand in the 2012 VDMS saga (you can read more about that here), spoke to the press about the matter and voiced her opinion. She released a press statement entitled: ‘NCR sleeps as African Bank and consumers crash and burn’. The NCR was not happy.
The NCR Strike Back
The NCR immediately sent Ms Solomon a letter demanding that she retract and desist from any comments which referred to them negatively. She refused. They said that this was in breach of her conditions of registration with the regulator since it brought the industry and the NCR into disrepute. They warned that they could deregister her as a result. Ms Solomon stood by her statements and so began a 3 year battle to resolve the matter.
‘Ms Solomon stood by her statements and so began a 3 year battle’
After the letter followed a ‘raid’ at the Debt Counsellor’s office by members of some official organisation which was never identified along with policemen. Soon after, an official NCR investigating team came to the Debt Counsellor’s office to go through her files. The sudden nature of the investigations and subsequent allegations of not fulfilling her duties smacked of intimidation and retaliation.
The matter then went dark and quiet for an incredibly long time as things progressed behind the scenes. Since this had become a legal matter, both parties were reluctant to speak out about the matter until it had been resolved at the Tribunal.
The NCT Rules On The Matter
The National Consumer Tribunal has the power to adjust a Debt Counsellors conditions of registration with the NCR and can also do things like issue fines or deregister Credit Providers and Debt Counsellors if warranted. For many years it seemed nothing was happening in regard to this case. The matter began in 2014 and it was only half way through 2017 that a ruling was finally given by the NCT. The recent ruling was in favour of the Debt Counsellor.
‘a Debt Counsellor is allowed the same constitutional right to freedom of expression… as other citizens’
The NCT ruled that the entire matter hinged around freedom of speech. The NCT also pointed out that it was in the performance of Debt Counselling functions specifically that the conditions of registration discuss bringing debt counselling and the NCR into disrepute (not in their personal views). The ruling says that there is a fine balance between defamation and freedom of speech but that in this case, the statements made by Ms. Solomon reflect her personal concerns and ties in with a constitutional right of a citizen to hold public bodies (like the NCR) to account.
In other words, a Debt Counsellor is allowed the same constitutional right to freedom of expression, in regard to public entities (like the NCR), as other citizens.
Ms Solomon, who is undoubtedly happy with the favourable result, says it is just a pity that the entire matter has been such a waste of taxpayers money. For many years, Ms Solomon has had to try to operate her day to day business under a cloud, both of the stigma of an investigation and the looming threat of not being allowed to continue to help consumers through debt review and be put out of business. Having the matter now put behind her will allow her not only peace of mind but greater freedom to continue to assist consumers and others in the industry to a fuller measure.