NCR To Be Investigated
Public Protector To Investigate NCR Over Inefficiency
Recently Parliament has been unsatisfied with the statistics they are receiving about consumers who are over-indebted. There was great hope that the creation of the National Credit Act (NCR) back in 2007 would help reduce abuses of the credit system.
It has been said that the National Credit Act (NCA) saved SA from the worst of the global recession and so it was a great success. It also allowed for the creation of the debt review industry which over the last almost decade has helped hundreds of thousands of consumers deal responsibly with their debt.
‘It has been said that the NCA saved SA from the worst of the global recession and so it was a great success’
The NCR & NCT
Part of the NCA was the creation of a Regulator to register and monitor the credit industry as well as the creation of a Tribunal to hear matters where breaches of the NCA had occurred. Over the years the NCR has registered thousands of companies and individuals as credit providers, Debt Counsellors , PDAs and credit bureaus. They have also produced many reports on these institutions and even had some of them shut down for not sticking to the NCA.
Twin Peaks
Recently there has been a change in the way South Africa is going to regulate things (Called Twin Peaks). A rather strange situation has developed where the NCA and it’s creation, the NCR in particular, does not clearly fit within one of the two planned parts of the regulation structure. This has created a rather unusual situation and caused many to look at the organisation with an eye to trying to figure out its future role.
Thus Parliament has been throwing a lot of questions the NCR’s way. They have been asking how efficient the organisation is. They have ben questioning their prosecution of those flouting the NCA and still offering credit to consumers which they know they will struggle to repay.
At the same time, the NCR has been trying to make a lot of big media splashes to raise it’s profile. The NCR have been creating more and more work for themselves in addition to that set out in the NCA. Taking on more and more work has, not unexpectedly, placed strain on the organisation.
‘This is placing huge demands on their time and resources’
More and more often, the NCR are organising additional bodies like the CIF and issuing guidelines and trying to enforce these guidelines. They have launched media campaigns about call centres and organised mass police accompanied raids. They have taken it upon themselves to try resolve complaints rather than refer them to the relevant organisations who should handle matters. This is placing huge demands on their time and resources. Some have said this busy work which they hope raises their profile is ironically keeping them from accomplishing their actual required functions.
Last year, the NCR suddenly seemed to have run out of money before the end of their financial year, causing many of their pet projects to come crashing to a screeching halt due to lack of funds. All these additional projects do cost a lot of extra funds. The NCR had to ask for more money and an increased budget to cover it’s self-imposed extra load.
Taking Matters to the NCT
One area that has been receiving increased attention, is the NCR’s ability to stop those breaking the law and to punish them. When this happens, after receiving a complaint and checking it’s validity, the NCR must take matters to the National Consumer Tribunal.
The NCT too have been experiencing challenges. Last year they received (at their own request) additional powers to hear a lot of different type of matters. At the same time, there was a big drive to have more Debt Counselling matters pass through the Tribunal rather than the courts (which are busy). Knowing that the flood gates were about to open the NCT, unfortunately, did not at least double their small staff numbers to try cope. The workload shot up and their ability to produce results sadly continued at their previous pace. This then meant that many of the matters the NCR were sending them got lost among a sea of other applications. In many cases, the NCR would run to the press saying they were going to prosecute and fine a credit provider only to have their matter wait months and months to even get heard. Some still have not been heard. Many have been heard and postponed. This gives the impression of not being able to deliver on their promises.
African Bank Case Sets A Bad Tone
In some cases, like that of African Bank, the Regulator dropped the case once an out of court settlement was made. Though they fined the organisation a lot of money it was a pittance compared to what they had told the public (and parliament) they would fine them. This made it look like the NCR were unable to ‘close the deal’ (legally speaking) on their prosecution.
Capitec Case Collapses
Recently the NCT rendered a real blow to the NCR in regard to a high-profile case involving Capitec. The NCR had done an investigation and had found what they thought were cases of reckless lending. The NCR told the media they were going to take Capitec to task. The matter was referred to the NCT. It looked like the NCR was in for a high-profile win at a time when everyone is trying to figure out their future.The NCT rightly said that the NCR had to have just cause to go into a credit provider and find fault. For example when a consumer lodged a complaint. The NCR’s high profile case with promised millions in fines for reckless lending was thrown out.
‘Things did not go the way the NCR hoped’
Things did not go the way the NCR hoped. The NCT rightly said that the NCR had to have just cause to go into a credit provider and find fault. For example when a consumer lodged a complaint. The NCR’s high profile case, with promised millions in fines for reckless lending, was thrown out and the NCR told not to go on fishing expeditions. This had very negative ramifications for some of the NCR’s other matters involving some raids they had previously conducted.
Suddenly the relationship between the two seemed to sour overnight. Next thing the NCT knew, the NCR was in front of Parliament asking for half of the NCT’s job -this with the seeming backing of the DTI. Suddenly the NCR began sending out proposals to the industry that seemed to totally ignore the presence of the NCT entirely (a big change after years of promoting the use of the NCT for DCRS matters). When asked by Parliament why the NCR could not successfully prosecute credit providers, the NCR kind of threw the NCT under the bus. Things got nasty and they still have not publically kissed and made up.
Summit Vs The NCR
Now after all of that, a company which was just involved with a high-profile court victory for consumers with unfair garnishee orders, has called for the NCR to be investigated. Summit Financial Partners (Summit) has motivated the Public Protector to launch and investigation into how things are run at the NCR. In particular, the investigation it seems will relate to the use of funds and the pursuit of prosecution against those who break the NCA. It is an investigation into as some have called it the ‘inefficiencies’ at the NCR. It is quite a public perception blow to the NCR’s reputation at a time where reputation is perhaps key to their future.
The Money
In 2011 the NCR’s budget was around R53 Million. In 2015 it was around R65 Million. Of that budget amount, nearly 10% was paid in bonuses (R6 million). This would be the same year the NCR, supposedly, ran out of money to host the CIF and other projects.
R6 Million paid in bonuses at the NCR last year. That’s 10% of their annual budget
The Complaint lodged by Summit also mentions the African Bank debacle and how the NCR knew of issues for a long time but only acted when the bank itself revealed an issue at one of their branches. The R280 Million discount on the proposed fine is a big part of the complaint. Also mentioned is how the NCR refused to help the Myberg Commission which was appointed to look into the collapse of African Bank and try pinpoint who was to blame. At the time the NCR said they did not have to share info and would pursue their own investigation (another new one). This left the Myberg Commission without enough information to complete their job. As such none of the key African Bank management have ever been taken to task over what happened. More than that all the possible reckless lending which ultimately probably caused the bank’s collapse has been swept under the rug.
Why Are Summit Going After The NCR?
Summit have been lodging complaints with the NCR about Capitec Bank matters. The NCR have refused to help since they say that Summit have disclosed info to them which they shouldn’t in terms of the POPI act. It is unclear if the NCR issued summit with the required notice which says they refuse to refer matters to the NCT (which then allows Summit to potentially go directly to the NCT if they wish) or not. The NCR seldom ever give complainants this non-referral letter. They often rather tell the complainant that they have simply “closed” the case.
Summit also are proud of their part in exposing some problems at Lewis Stores with their insurance offerings. This they say was then hijacked in the press by the NCR, who tried to make it look like they did all the heavy lifting.
‘private individuals are being forced to pay to approach the High Court in order to obtain justice since the NCR won’t get involved’
Summit have said their recent big profile win for consumers with garnishee orders had to be taken to the highest courts in the country because the NCR (and NCT) failed to help them resolve the matter. They complain that private individuals are being forced to pay to approach the High Court in order to obtain justice since the NCR won’t get involved.
When media organisations like Personal Finance contacted the NCR for comment they replied that they were, at the time, unaware of any pending investigation. It seems that the Regulator – who is used to being the one to monitor and investigate – will now come under close scrutiny. Something that their detractors will, no doubt, be sure to take advantage of.