Back in 2009 the NCR arranged for a task team of credit providers, debt counsellors and retailers to work together to help identify things that were causing problems within debt review. At the time there were many large issues which were plaguing the process. The Task Team produced a report which not only identified the issues but sought to propose ways around the issue. The report and suggestions met with a mixed response from the industry.
In the main, Creditors were happy with most of the suggestions and agreed to stick to the findings on a voluntary basis. Major credit providers were able to implement the various suggestions with varying degrees of success. Systems were put in place within most large credit providers to use the various steps outlined in the Task Team Report. When dealing with Debt Counsellors creditors now began using the reports suggestions as their norm.
The National Debt Mediation Association (NDMA) -who at the time were funded by the Banking Association of South Africa – even took the suggestions on how to solve debt and made them into a computer program and set of “rules” for their members to use in trying to solve consumers debt issues under debt review. This program is seen as the original form of the the current “DCRS” computer program for working out how to split up consumers available funds to repay debt.
Since members of the task team had come from the Debt Counsellors Association of South Africa (DCASA) it was easy for members from this association to agree to most of the guidelines. Debt Counsellors from other associations (and those who did not want to associate with any Debt Counsellor Association) were not as convinced. They felt that the tone of the report was heavily slanted toward how credit providers would like to see debt review done. Since the Task Team report covered many items not specifically dealt with in the National Credit Act (NCA) there was a lot of concern that the suggestions fell outside the Act and could not be enforced or may go beyond the law itself. The NDMA’s support of the program and issuing of rules further damaged adoption of the suggestions as many Debt Counsellors did not want to be dictated to on how to solve consumers debt problems. Many Debt Counsellors were troubled by the NDMA’s offering debt review like services outside of the NCA and debt review. At the same time the NDMA were struggling to get more credit providers to join their organisation and abide by the new way of doing debt review. The fact that the Task Team said that Debt Counselors could not help those who were not working at the time was debated at length.All these debates and concerns led to a mixed adoption of the NCR Task Team report suggestions at the time.
The Revival of the 2010 Task Team Report
Over time things settled down and those credit providers who applied the NCR Task Team report did so to whatever extent they wanted and those Debt Counsellors who paid it attention adjusted their processes to match the suggestions to a reasonable degree but the NCR never did terribly much about the report. That changed recently when the NCR set up what is called the Credit Industry Forum (CIF) in 2014. The CIF is a revival of the Debt Review Advisory Committee which existed in the past and advised the NCR on how matters not covered in the National Credit Act could be dealt with. DRAC suggestions also met with mixed result s due to poor representation of consumers and a huge portion of the Debt Counsellor community. The CIF have attempted to overcome this barrier by gaining wider membership. At present 3 Debt Counsellor Associations (after some fighting to be included) are members of the CIF. In recent time more consumer representation has also been added. Matters that are set before the CIF require 100% consent from all members before a report is made to the NCR who have said they will then consider these and possibly issue guidelines to the industry on various subjects.
CIF Sign off on Task Team Report
One of the first matters which were raised at the CIF in 2014 was the 2010 NCR task Team report and the suggestions in the report. After a series of swift sub committee meetings soon after the CIF’s inception the NCR Task Team report was forwarded to the NCR as a proposal from the CIF for the industry. There was concern among many members that without the Task Team report being ratified by the NCR many of the concessions and processes in place for 4 years might be lost. The NCR sat on the suggestion from the CIF for many months; possibly due to the anticipated National Credit Amendment Act 2014 (NCAA2014) which was published in the Government Gazette but not brought into effect (until an effective date is published by the President) – in what has become clear was a political play of some sort similar to the 2014 “credit bureau amnesty” (actually just a change to how some data was allowed to be shown). The NCAA2014 makes some parts of the Task Team Report somewhat outdated (which is no surprise after almost 5 years) and will mean that some of the suggestions need to be amended. Over the last 5 years there have also been many court cases which have clarified a legal understanding of the implementation of some parts of the NCA which were also touched on in the Task Team Report.
NCR’s First Guideline
The NCR have now issued the 2010 NCR Task Team Report as “guidelines” to the industry. The document distributed makes mention of the NCAA2014 and those court cases that have refined our understanding of the process as set out in the NCA and says that the Task Team Report Suggestions which are now to be seen as guidelines needs to be adjusted with these factors taken into account. At the same time the Report is to be seen as a “guideline” and that anyone not following the guidelines is to be reported to the NCR directly.
Since many larger credit providers had implemented parts of the NCR Task Team Report years ago they are hardly impacted by the new guidelines at all. For some smaller credit providers who have not been supporting the debt review process the new guidelines will have a greater impact. They now face being reported to the NCR. What will this mean? It is unclear.
Within the Debt Counsellor Community there has been a mixed response (as has become normal). DCASA have been most clearly in favor of the guidelines. The BDCF have been quiet on the topic and the Members of the Alliance of Professional Debt Counsellors are now discussing the matter in depth. Some non associated Debt Counsellors have been discussing the NCR’s ability to issue “guidelines”. They feel that the NCR can, in terms of the NCA, only issue non binding opinions.
Can it be enforced?
It will now be interesting to see if and how the NCR would go about taking any action where registered DCs & CPs are not following these guidelines. If these guidelines can’t be enforced then should the NCR even bother issuing them? Is it not sufficient that all members at CIF level agree that a particular process is right? Is the NCR setting itself up for another reputational threat? There has been some talk about the NCR possibly changing the terms and conditions of registration for CPs and DCs to mention these guidelines. Would this even be possible or enforceable in term of the NCR? The NCR obviously feel that the guidelines will help clarify issues within the industry and make the process more effective. The Task Team Report is also the foundation of many aspects of the DCRS system which the NCR recently came out in favour of and recognised as a legitimate way to solve debt review cases. The CIF will soon once again be discussing the Task Team Report to try bring it into alignment with current law (and soon to be enacted law). This means that we could see the first amended NCR guideline on the way.