DTI Research Forum
DTI Research Forum On Debt Counselling in SA
The Department of Trade & Industry recently held a forum in Gauteng with a select group of industry parties including the NCR, many of the banks, some Payment Distribution Agencies and a few debt counselling firms.
The forum was held with the intent of gathering more information about the impact of debt counselling in South Africa. The DTI are looking back at the last 10 years of debt review and considering how effective it has been.
Debt review or debt counselling is a process where people who have income can get help via a court to have their debt repayments restructured to an amount they can actually afford. Parliament has recently also decided to introduce another similar process for people who have almost no income or even no income called Debt Intervention. With this in mind, it is good for Government to get a feel for what is happening with the already well established debt review industry.
The forum was designed to gather additional information from those in the industry rather than share what the DTI and NCR have already found out from their recent market research. It also gave the audience the opportunity to make comments and offer suggestions to be considered by the DTI.
There were two presentations on the day. The first of the day was by the Debt Counsellors Association of South Africa and was presented by Mr. Paul Slot.
Credit Providers Pushing People Out of The Process
Around 1.2 million people have made use of the debt review process over the last decade. Over half of those who have begun the process have been kicked out of the process by credit providers for a variety of reasons including not making payments while in the process (the process is designed around the concept of paying off your debts).
Still, hundreds of thousands of those who have applied are currently active in the process and of those who started the process supposedly around 20% have received a clearance certificate or finished the process over the last 10 years.
‘Over half of those who have begun the process have been kicked out of the process by credit providers for a variety of reasons’
Q&A
After the presentation, the audience got to make comments and suggestions.
Suggestions were made, among others, in regard to adjusting the current format of PDA statements (which often differ from credit provider statements due to the credit providers being nad at implementing the court orders speedily and the debt review plans onto their computer systems)
The second presentation of the day was from debt counselling firm Debt Rescue. The presentation focused in on the need for debt review and the basics of how it works. It also looked at the benefits to individuals and the overall economy.
Q&A
The final question and answer session was rather robust with some hard questions being posed by the National Debt Counsellors Association into why the industry is not growing and what can be done to reduce costs and streamline the process for consumers and those in the industry.
Suggestions ranged from dropping the current court process to reworking the wording of the National Credit Act. It was pointed out how quickly the recent “debt intervention” bill was created and pushed through parliament showing how if there is a will then things can be done. Past amendments to the Act and regulations have failed to include some pretty basic issues and wording as well as failed to introduce official costs for the process.
Limited Input
There were around 40 people at the forum which ended quite early. Strangely hundreds of others were not invited to the forum including many Debt Counsellors and groups of Debt Counsellors (associations) as well as some of the Payment Distribution Agencies (there are only 4 who are registered with the NCR). This may have inhibited the effectiveness and the inclusiveness of the event. Many in the industry are very disappointed they were not presented with the chance to contribute. It is unclear why others were not invited to participate.