DCASA Webinar on NCA Sect 101(3)
The Debt Counsellors Association of South Africa (DCASA) provide ongoing training for members. Recently this has been done via very successful online webinars. This month’s webinar discussed when an overdraft is linked to a current account. This is an interesting situation because a current account is not a credit agreement but an overdraft is always a credit agreement and has to be included in a debt review.
‘an overdraft is always a credit agreement and has to be included in a debt review.’
The NCR have been receiving lots of complaints from consumers and Debt Counsellors about these types of accounts. This is because some credit providers accept proposals on the overdraft (which is frozen at the time of applying for debt review) but then later split the two accounts and still charge fees on the current account.
‘some banks now charge fees for an account that cannot be used’
The problem is that normally, at the time of the application the current account is also frozen. Even though frozen, some banks now charge fees for an account that cannot be used. Since these accounts are not credit agreements the question being asked is why do the banks inhibit access to these accounts?
One of the complaints to the NCR and banks has been that the consumer is not asked to sign permission for such a split and that in these cases they stop getting statements about these accounts (and so won’t notice the bank adding fees for a while).
This topic was discussed in detail in the recent DCASA webinar. In particular, at present FNB and DCASA have been talking about this topic a lot. They are hoping to come to agreement or at least a better understanding of each others motivations. DCASA however would like to see this bank come into allignment with what some of the other banks are doing.
Charges on Such Accounts
Section 101(3) [linked to Regulation 44] sets out what a credit provider can and cannot charge for. The Regulations for such an account actually limit such charges to R60 per month. This means nothing more can be charged. This has been one of the motivations for some of the banks to “split” the accounts so they are not limited to only R60/month on the other account and can try add other service fees etc.
‘It is thus important that a consumer cancels all debit orders on such accounts’
It is thus important that a consumer cancels all debit orders on such accounts (which are ironically frozen) so that they are not hit by repeated unpaid or rejection fees etc. These fees can add up exponentially. This is best done at a branch level. Some Debt Counsellors even talk to the consumer about closing the current account (if the branch staff have been properly trained).
Induplum Also Applies
Another hot topic discussed was the ever contentious NCA Section 103(5) known as super induplum. This is a wonderful feature of the NCA which limits what credit providers can ever charge against an account that falls into default. This greatly protects consumers from runaway fees and charges on an account they are not able to pay at present. It also stops credit providers from adding more and more fees over several years. Basically, this section limits the fees and charges and interest from ever adding up to more than the debt (so the amount owed and repaid can never be more than double what was owed at the time of default).
This Section (103(5)) also applies to any charges or fees on a current account which was linked to an overdraft.
Useful Training Keeps Debt Counsellors Current
Such webinars and training are available to association members and in the future members will also be able to download and use these webinars to train staff or just to rewatch them to refresh their knowledge on the topic.
