NCR Look To Establish Pool Of Debt Counsellors To Hand Clients To
The National Credit Regulator (NCR) want to find a pool of Debt Counsellors to handle clients of Debt Counsellors who are deregistered or whose registration has lapsed.
Each year the NCR issue renewed registration certificates to Debt Counsellors which they use at court when making applications on behalf of consumers. Debt Counsellors have till the end of July each year to pay their renewal fee or their registration with the NCR “lapses“. Once this happens it becomes hard for the Debt Counsellor to collect their fees from consumers if they make use of a Payment Distribution Agent (which is required by most Debt Counsellors T&Cs of registration).
‘If a Debt Counsellor’s registration lapses they then have to apply to be registered by the NCR all over again.’
If a Debt Counsellor’s registration lapses they then have to apply to be registered by the NCR all over again. The registration process has a rather bad record of taking a very long time and can leave the Debt Counsellor unable to collect earnings for many months.
Some Debt Counsellors, however, do not want to renew their registration and want to move on to other interests and employment. They may then decide not to pay the renewal fee. In such a case, the former Debt Counsellors consumers will need the assistance of a different Debt Counsellor. Normally, this is arranged by the Debt Counsellor with the clients and the new Debt Counsellor well in advance and the NCR’s online database is updated by both Debt Counsellors.
In other cases, however, it may be that the Debt Counsellor becomes unable or unwilling to continue doing their work and helping the clients. This could then potentially leave the consumers out in the cold calling around to different Debt Counsellors looking for someone to handle their matter. Consumers may also turn to the National Credit Regulator for assistance.
DeRegistration of a Debt Counsellor
In some cases, the NCR has even asked the National Consumer Tribunal (NCT) to remove the registration of a Debt Counsellor due to some offence or prohibited activity. Though this has only happened to 23 out of around 3000 Debt Counsellors over the years it can happen. In such cases, the NCR has moved clients from that Debt Counsellor (if any remained) over to other Debt Counsellors. Normally by that time however the soon to be deregistered Debt Counsellor has shifted their clients over to someone else if they saw how things were shaping up.
In theory, it could also happen to a credit provider or bank who is deregistered. The NCR may then try to apportion out their clients to other banks or similar credit providers (though this seems much less likely somehow). Can you imagine if (for example) Capitec Bank missed their renewal date for registration and the NCR told all Capitec Bank clients they are now moving them over to X bank? That would probably not go down very well with the clients or the bank.
Forming a Panel of Volunteers
This is why the NCR are now looking to find a pool of volunteer Debt Counsellors who would be willing to take over such matters from the previous, now lapsed registration Debt Counsellor and try ensure things run smoothly. This pool of volunteer Debt Counsellors could also then be available to take over any clients of a deregistered Debt Counsellor.
When Lapsed Debt Counsellors Are Registered Again
One scenario is particularly tricky, namely when a lapsed Debt Counsellor gets registered again and where the NCR has already moved clients over to another Debt Counsellor. You may ask: What happens then?
It would seem logical that the clients would then be moved back to their original Debt Counsellor who may well be the Debt Counsellor of record on the all important court order. The only reason the clients were moved in the first place was due to the former Debt Counsellor not being currently registered (ie it lapsed). Once that situation is remedied then the problem disappears. It is not known if such a situation has ever come up since the NCR have only been lapsing registrations for a few years and are only now having to find ways to deal with the resultant fall out.
Since the new Debt Counsellor has done a lot of work to get the clients’ matters sorted out under their name (and it takes a lot of work to move clients over and get the credit providers to cooperate with a new Debt Counsellor when their computers have the old Debt Counsellor’s name on record) they may not want to let the clients go. Also, the clients themselves may not want to move back. So, the situation may get messy.
It is even unclear if the consumers get any say in who they want to assist them under such a process. There may be some Consumer Protection Act issues here in the long run that come to the fore in years to come.
‘the NCR are calling for volunteers to provide them with information about their ability and willingness to handle such cases’
All said however it is a good idea to have options available to the Regulator and the clients of a Debt Counsellor who is deregistered or whose registration is lapsed for one reason or another. This is why the NCR are calling for volunteers to provide them with information about their ability and willingness to handle such cases.
‘many of these clients will pay around R125 a month in aftercare fees to the Debt Counsellor’
The NCR indicate in Circular 8 of 2020 that they would look to distribute such effected clients in a rotational way. This would try to promote as fair a method as they can currently envisage to (1) spread the workload and indeed (2) some income (since many of these clients will pay around R125 a month* in aftercare fees to the Debt Counsellor).
17 July Deadline
Debt Counsellors who want to possibly participate were given until the 17th of July to submit an application for consideration for the panel.
*though aftercare fees vary based on a percentage of the repayment this is a fairly “normal” or average aftercare fee for the majority of clients in debt review recently.