Debt Counsellors, The NCR and Debt Help Statuses
Isn't That the Debt Counsellors Job?
In 2022, the NCR added additional steps to their process for Debt Counsellors to capture information about whether people are ‘over indebted ‘and entered debt review or are paid up and can leave debt review.
Recently, these additional steps were considered at the National Consumer Tribunal (NCT) to determine whether this had led to the NCR performing the statutory duties of a Debt Counsellor.
Some Background
In 2021 and 2022 there was a burst of “get out of debt review” scams that hit the internet.
Consumers started paying scammers thousands of rand to get out of debt review.
For many this was due to having dropped out of debt review years before and still showing as actively being under debt review. A huge market of nearly 1 million consumers sits with this dilemma due to the wording of the National Credit Act, record keeping practices at credit bureaus and guidelines about withdrawing from debt review.
The NCR found a good solution to make it impossible for Debt Counsellors and others to scam the system and now required proof of certain things before they would now change the statuses on their database. The idea was that this would shut down abuses and get rid of such scammers.
A Trapped Consumer Complains
When a consumer entered debt review in 2023 with good intentions their Debt Counsellor captured them on the NCR’s Debt Help System (which we will call DHS for short).
This notified the various credit bureaus of the consumer’s intention to settle debt via debt review.
The Debt Counsellor sprang into action and came up with repayment plans and did a lot of work. Unfortunately, the consumer then got cold feet and decided not to follow through. They never paid anything towards their debt via debt review.
They were however showing as under debt review on the credit bureaus.
One way to make the listing go away would be to simply change the status on DHS to show the consumer was ‘not over indebted’. But that was not factually true. It did appear that the consumer was very over indebted and thus really needed debt review.
But the consumer was not paying for debt review services and was hoping to gain access to more credit. Credit that was now shut off to them due to records at the credit bureaus.
Eventually, the consumer became unhappy and began complaining to the NCR and about the NCR not being willing to sort things out. They also, complained about the Debt Counsellor for following the guidelines about withdrawing consumers from debt review.
Hello Peter was one place where the consumer complained a lot.
The Need For Some Clarity
The complaint eventually led to the Debt Counsellor wondering if these changes (to how information is captured on DHS and sent to the credit bureaus) was not placing staff at the NCR in the place of the Debt Counsellor.
Another concern was if the changes, brought about by those circulars, had robbed the Debt Counsellor of their ability to do the duties required of them.
The matter would eventually make its way to the National Consumer Tribunal (NCT) who are able to deliberate and rule on such matters.
The NCT Case
The Debt Counsellor and NCR both presented their thoughts with the Debt Counsellor saying the changes to how the data is captured on DHS is difficult because the NCR asks Debt Counsellors to make such changes on the system in their T&Cs of registration but at the same time have removed the ability for the Debt Counsellor to do so.
The NCR argued that it is just some administrative steps and that doesn’t stop the Debt Counsellor from doing their required job.
There was some technical considerations where the NCT ruled whether the application by the Debt Counsellor fell under NCA Section 3 or Section 49 or as the NCR argued under NCA Section 15(c) of Part A of Chapter 2.
The NCT, ruled that the changes to the process do not prevent the Debt Counsellor from being able to do their statutory duties. They feel it just adds some more administrative steps along the way (that the NCR are part of).
They also do not feel it means the NCR is doing the job of the Debt Counsellor.
A Happy Consumer?
After the case was heard it seems that the consumer’s overindebted status was changed on the DHS and this then means that the debt review flag on the credit bureau side was eventually removed. This lead to some nice Hello Peter comments.
Hopefully, the consumer was happy that they were then able to go ask around for more credit should they so desire.
Of course, if the Debt Counsellor was correct and they do appear over indebted, credit providers would risk reckless credit fines should they give such a consumer access to more credit.
Still…the ruling does supply some clarity on this matter.
It also helps consumers realise that since 2022 they cannot inaccurately be listed as being under debt review on the credit bureaus since the NCR is checking all such matters thoroughly.
You can download the full ruling here: