NCR Issue Post Coetzee Fee Circular
In a recent court case (First Rand Bank & Nedbank V Coetzee) the High Court said, in it’s ruling, that it felt that it was not right that the Debt Counsellor ask for their fees before the debts are settled. The court then suggested that the Debt Counsellor should be treated like one of the credit providers and be paid off month by month rather than in accordance with the NCR’s issued non binding opinion on debt counselling fees.
Many felt that this ruling – which saw the Debt Counsellor ordered to pay a lot of money in legal fees shows that the NCR’s fee guideline carries no actual legal weight or merit what so ever. The NCR’s recommended fee structure makes allowance for the Debt Counsellors professional fees to be drawn during the first month of the debt review process. The NCR have now felt compelled to comment on the matter in the face of this sentiment.
In a recent Circular (Circular 6 of 2016) the NCR have stated that they feel that the judge obviously did not want to cause chaos across the industry and make it possible that different courts could start to make rulings on how Debt Counsellors should receive their professional fees. They have said that due to the wording in the ruling that a monthly fee payment “may” be a better way of taking fees that it is not obligatory and can thus be ignored (as per their recommendation).
Debt Counselling fees are hot topic as the NCR long last reviewed the fees and Debt Counsellors across the industry feel the NCR’s fee guideline is outdated and does not make allowance for many parts of the current debt review process or workload.
Debt Review & Debt Counselling Fees – Not Regulated
Worth taking note of in the entire matter is that there is currently no legal limit or structure to debt counselling fees only a non binding guideline which the NCR are determined that Debt Counsellors follow but which as this court case shows carries no legal weight. Also of note is the fact that Debt Counsellors do already get a monthly payment for ongoing professional care. Another consideration is that though the NCT recently issued increased costs for NCT matters the NCR have not issued an updated guideline in regard to NCT fees which Debt Counsellors can charge. It is hoped that the DTI will issue regulations in regard to the matter or that the NCR update their guidelines should the DTI decide not to do so to allow for competitive service offerings.
Download the Circular here: