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Not Every DC Makes It Work

There are currently 1,653 registered Debt Counsellors in South Africa, but shockingly, over 3,143 other individuals who were once registered with the National Credit Regulator (NCR) have since given up, or been removed from the industry.

Many of these former Debt Counsellors couldn’t run a sustainable practice, while others were caught acting unethically and had to be shut down. This goes to show: being qualified is not the same as being good at the job.

Debt Counselling is a lifeline to consumers in need, but it is not an easy business to run well.  Here are ten red flags to look out for that are a warning that you, as a Debt Counsellor, might be bad at debt review:

1. You’re Not Getting New Clients

Every business planetwide wants more clients, but if you are not getting any clients or hardly any, then you have a serious problem.

It’s tempting to blame the economy, but if your practice isn’t gaining clients, it won’t survive. We all know that debt review income, while structured around ongoing monthly aftercare fees, is heavily slanted towards restructuring fees (since many people lack the discipline to stick with the process). Without new consumers entering your pipeline to offset your churn, your business will eventually collapse, resulting in harming existing clients.

RATHER: If things are slow, it’s time to learn, time to innovate or invest in marketing the right way. You need to know how to get clients if you have any hope of lasting.

2. You Don’t Regularly Update NCR Debt Help

Capturing information on the NCR’s Debt Help System is not just a “nice-to-have”; it’s part of your terms and conditions with the NCR.

If you fail to update records, you’re showing your disdain for the NCR, and that will come back to bite you. That is never going to end well. If you are ignoring that part of your T&Cs …what else are you ignoring?

RATHER: Even though we know the system is pretty broken, do your part. They will eventually sort it out.

3. You Take Payments Direct From Clients

Taking payments directly from clients violates your NCR terms and conditions of registration*, which require the use of a registered Payment Distribution Agency (PDA) for you as the Debt Counsellor.

While you may have clients who can and do pay credit providers directly (and that’s fine) you need to have a PDA between you and your client. This creates accountability and a record of payments.

If you are taking initial payments to a separate bank account and only aftercare via the PDA, you are headed for trouble.

RATHER: Get payments via a PDA and don’t charge amounts you are ashamed of. Alternatively, head to the NCT and officially have your T&Cs changed.

* A very small selection of old DCs have different set of T&Cs. Newer DCs will have signed that they must use a PDA.

4. You Use Misleading Advertising

Sure, clickbait gets hits. But what follows for potential customers is disappointment and later, for those who do sign up, high drop off rates.

In the short term, it results in underqualified leads jamming up your sales funnel and ultimately misleading ads damage your brand, and tarnishes the reputation of the industry. So, think twice before saying… the President has a great new way for consumers to write off their debts or offering fake consolidation loans.

RATHER: Learn to advertise to exactly the right people to get high quality leads who will convert. Free up your admin team from costly time-wasting work.

5. You Charge Excessive Fees

Yes, fees are not officially regulated and no, the NCR fee guideline is not legally binding, but that doesn’t mean you should be charging people an arm and a leg.

When consumers are charged unjustifiable restructuring or heavily loaded legal fees, your practice might be staying afloat for all the wrong reasons. A truly sustainable business doesn’t need to squeeze every cent from cash strapped consumers.

If this is all that’s keeping you in business, then you have already failed.

RATHER: Use the NCR fee guideline and work with attorneys who charge reasonable and justifiable fees.

6. You’re Bad at Answering the Phone

If clients can’t reach you, then you are basically useless to them.

Responsiveness is core to trust and support. If they can’t reach you, they will head to HelloPeter or the Regulator’s complaints department. If you are ducking calls from clients, then it’s not long till the NCR comes to shut you down.

RATHER: Sort out your communication channels. Get more staff or better systems. Be there for your clients when they need you.

7. You Don’t Provide Clients With Ongoing Feedback

Clients in debt review are anxious. It’s stressful trying a new process when your entire financial future is on the line.

Clients want to know things are moving. Silence simply creates stress and distrust. Remember you get a monthly retainer for aftercare. That money is not for nothing. It covers your ongoing support to consumers, care they desperately need.

RATHER: A quick email or update makes all the difference and shows respect for your client’s journey. Supply your clients with resources and financial education. Help them to feel safe, and learn while in debt review.

8. Your Website is Outdated

First impressions matter.

A clunky or outdated website that doesn’t work on mobile devices reflects poorly on your professionalism. You don’t need a big budget…just something clean, clear, and current.

RATHER: Get in a professional (or teenager) and update your site to look current. Remove old inaccurate information.

9. Your Social Media is Inactive

If your last post was from 2019, it probably looks like you’ve gone out of business.

A quiet social media channel can hurt your credibility more than having none at all. People who are trying to check up on you will definitely visit your social media channels. If they don’t find anything recent they certainly won’t sign up for fear that you are not a serious business.

RATHER: Stay relevant with simple, helpful posts. Something simple on a regular basis is better than nothing and very helpful information all the time is best.

10. You Sign Up Consumers Without Informed Consent

If you’re pushing sign ups without clients fully understanding what debt review is, you’re already in unethical and possibly fraudulent territory.

Trickery and fraud have no place in debt review. People need to be fully informed when making such an important decision. It will also get you fined and deregistered.

RATHER: Reward your sales people for successful long-term cases, not just upfront volume. Link some of your commission to month 3 or 6 payments. Team up your sales and admin staff for some of their commission. Simplify your documents and ensure consumers are fully informed.

Be the Best Not the Worst

Being a great Debt Counsellor is about more than just doing the course and convincing people to sign up for the process.

It’s about a high standard of ethics, professionalism, and service. Happy consumers spread the word about how great debt review is. They will confidently recommend your services to their friends/family when they need help.

If you are a Debt Counsellor, new or old, avoid propping your practice up with dodgy behaviour. If that’s where you are now, then sadly your practice is already doomed. And when your whole operation falls apart, it will be the consumers and their families that lose out the most.

So, rather be part of the solution, engage with industry role players, continually improve your service levels, follow the rules, and most importantly—treat consumers with the respect and transparency they deserve.

The success of your practice and the health of the industry depend on it.