An Interesting Development At The CIF Debt Counselling Fees Subcommittee
NCR CIF Debt Review Fees Discussion
The NCR currently have a workgroup looking into the fees chared for debt review and the timing of such fees.
The objectives have been to try to ensure consumers get value for money and that credit providers get funds as soon as possible.
Debt Counsellors have attended and hoped to discuss the possibility of adjusted fees or the inclusion of fees for services commonly offered by not covered by the old NCR fee guideline.
Debt Counsellors were told this would not be possible…until now.
The 2018 NCR Fee Guideline
After immense pressure from DCASA since 2014, the NCR reviewed and published a new fee guideline in 2018.
Though not the law (like the NCA is), the NCR’s guideline for fees is the most widely used fee structure in debt review. The NCR are quick to take Debt Counsellors who deviate from the guideline to task if they feel consumers are being abused by excessive fees.
Since 2018, not only has inflation made serious inroads into the value of such fees, but there have been many refinements in the debt review process and a growing number of additional services that consumers are looking for. The former fee guideline does not cover such services.
Thus when the NCR announced that there was going to be a “fee review” in 2024, Debt Counsellors were excited.
Many Debt Counsellors are concerned about the sustainability of their practices and the ability to continue to offer their clients a high level of service. To do so, their practices need to be sustainable.
That excitement quickly faded, however, when Debt Counsellors attending the subcommittee were initially told that the actual fees themselves were not being looked at, simply the timing of when such fees might be charged.
It became apparent that the NCR’s Credit Industry Forum (CIF) was actually focused on trying to ensure that credit providers would receive funds at the end of the 3rd month that the consumer is under debt review. This is beneficial to credit providers due to things to do with provisioning (setting funds aside to cover bad debts).
A Sudden Change
In a sudden shift, the NCR has indicated that it will entertain discussions on the actual fees themselves.
The NCR got the ball rolling with a draft proposal and are currently taking comments on the proposal. Feedback has been mixed with several parties expressing concerns over some aspects and delight at other provisions (which is typical of a first draft).
The NCR then surprised everyone and announced that other new fee proposals may also be submitted.
Debt Counsellors Are Excited
The move has been seen as very welcome by both the Debt Counsellors Association of South Africa and National Debt Counsellors Association.
These associations are now rushing to get input from members on possible fee structures that align with current workflow and future developments.
No doubt vigorous debates will follow as all parties (eg. BASA, MFSA, PDASA, DCASA, NDCA, the NCT, Various banks and the Regulator) try to find the “perfect” balance between the needs of consumer, credit provider and Debt Counsellor.
While this will likely not mean any “quick wins” for the subcommittee this year, it could have lasting benefits to the industry and consumers.