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NCR Call For Comment On Abandoning Reckless Credit Investigation Fee

When the NCR recently changed their suggested Fee Guideline to include a fee to cover the work involved in Reckless Lending Investigations to try to motivate Debt Counsellors to actively look into the matter they were probably not ready for the complaints they would get from credit providers when Debt Counsellors suddenly began to investigate regularly.

The NCR immediately began to receive a lot of pressure from unhappy credit providers as they were now being regularly asked to provide information on the credit they have given consumers. This takes time and effort and exposes them to possible fines and costs if they did offer credit recklessly. Reckless lending accusations are also bad for share prices.

Of course, consumers received massive benefits in getting an extra level of attention in regard to their rights, which may have been ignored or lacking in the past (as reckless lending matters take a huge amount of time and effort for Debt Counsellors).

‘The NCR have subsequently decided to remove the fee entirely’

The NCR have subsequently decided to remove the fee entirely as you can see below in the new proposed fee guideline for Section 3 (it used to have a section 3.2 which covered reckless lending investigations).

Was The Fee Not Actually Meant To Be Charged?

Some say the fee was being abused as Debt Counsellors were charging the fee but not actually doing the work. This does not seem to be the issue as the NCR could easily have issued a guideline on how to investigate such matters (a simple one page circular) but they did not. In the past, the DTI has issued requirements for things like affordability assessments (where before there had been no guidance and credit providers could do it however they wanted). So, this would not be an unusual or unprecedented way to go if the issue was a simple abuse of the fee. Some felt that this fee, unlike all the other fees included in the same guideline, should not be charged to all consumers as some consumers matters should not be investigated.

Other Changes

There are also other changes which have been added to the proposed fee guideline which set out further clarification or requirements during the restructuring process as you can see below:

The one change is a clarification on the timelines involved with some pretty basic matters like actually sending proposals to credit providers or getting the matter to court (some – but not many- DCs prefer to go straight to court and use the court documents as their proposals, allowing the credit providers to respond at a court level rather than enter negotiations beforehand.)

The second addition is a note to say that if a consumer has bucket loads of money to pay towards their debt each month and they have funds left over available at the end of the first month (after paying the Debt Counsellors professional fees) then they should be encouraged to pay these extra funds over to credit providers (which is a pretty standard industry practice as it keeps credit providers happy).

Call For Comment

The new guideline will be published in the Government Gazette and the public will be asked to comment. If you have an opinion on these matters and would like to comment then you are encouraged to send a comment to by 31 October 2018.