The Debt Intervention Bill Signed Into Law
A new law which provides relief for over-indebted, lower income consumers has been signed into law by President Ramaphosa this week.
The new law seeks to help consumers with a smaller amount of debt of only up to R50 000 and who earn less than R7500 as a combined household each month. The new form of debt review is called debt intervention and the service will be paid for with taxpayers money rather than that of the consumers involved or the banks.
The new law may, however, be unconstitutional and could immediately face challenges at court. During the drafting phase, the lawmakers brought in their own experts who reported that some unconstitutional provisions might indeed be included in the law. The committee members involved decided to go ahead regardless and parliament and the Presidency have followed suit. Now the matter may be presented to the courts as concerned credit providers and other interested parties may need to turn to the legal system to consider the constitutionality of the law.
Another challenge facing the new law will be implementation as the National Credit Regulator (NCR) will now become the country’s biggest call centre for debt review. In the past, the NCR has had issues with large Debt Counselling firms because of they worry that some consumers are not dealing with their Debt Counsellor all the time and are often dealing with an assistant for some clerical matters. The NCR now faces the same dilemma as they will soon be flooded by hundreds of thousands of calls and applications for debt relief.
No doubt they will have a system in place that large debt counselling firms will be able to copy in the future to ensure the best service to consumers.
The NCR will be in the interesting position to be the middle man in the debt intervention process but also the penultimate authority over the credit providers who will be interacting with them in regard to debt intervention matters daily. Many worry that this conflict of interest will cause problems but the lawmakers did not foresee any possible problems and are confident that the NCR will handle the matter. One benefit is that the NCR can simply hand a qualification certificate to any staff members who work for them and are empowered to deal with consumers. They will be able to fast track these. Hopefully so since Debt Counsellors often express concern over the time period it takes to be registered by the NCR to begin practising after qualifying to do so.
The NCR’s Reputation At Stake
Others feel that the entire process may put the NCR’s reputation at risk and expose them to the risk of failure on behalf of hundreds of thousands of desperate consumers. On the other hand, it may be just what the NCR needs to bolster their reputation at a time when negative accusations are flying back and forth about the inner workings of the organisation.
Certainly, the NCR are about to become much busy than they have ever been and will presumably be taking on hundreds of new employees to cope with the workload.
For consumers who have become overburdened by their debt, the new law may give them an additional option in receiving debt relief in addition to things administration, debt review and sequestration.
Be sure to read this month’s issue of Debtfree Magazine for more details about the new law.