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NCR Workshop Highlights: Monitoring & New DC Fees

At the recent National Credit Regulator (NCR) workshop the NCR reported that since April 2016 they were able to conduct 307 monitoring visits with Debt Counsellors. In 112 cases they had to ask the Debt Counsellor to change certain things. The NCR have also switched to electronic monitoring for some Debt Counsellors and this has allowed them to do more, faster with lower costs. The monitoring visits have shown that many Debt Counsellors are struggling to get their clients to complete confirmatory affidavits which are needed for the court applications.

‘the NCR plan to try force Debt Counsellors and Credit Providers to make use of …DCRS’

The NCR stated that they would like to see more matters get resolved by consent and thus promote the use of the DCRS system as a negotiation tool. In fact, it was stated again that the NCR plan to try force Debt Counsellors and Credit Providers to make use of the DCRS debt restructuring calculator. They may try to do this through a code of conduct or via terms and conditions of registration.

Annual renewals have also proved to be more tricky than the NCR imagined with huge delays from their side in Debt Counsellors getting their certificates and with over 700 Debt Counsellors having paid the incorrect amount for their renewals. In many cases, the Debt Counsellors in question paid the old fee or paid only part of the new massively increased fee (they forgot to pay the extra branch fee which applies to all even if you only have your one office. This is still considered a branch).

Debt Counselling Fees Being Reviewed

NCR logoThe NCR acknowledged that a fee review was well overdue and that the research into the topic has been completed and now the NCR are looking for an Actuary to look over the suggested new debt review fee structure. It is said that there were 3 possible structures put forward for consideration after the research was completed.

‘The NCR acknowledged that a fee review was well overdue’

The NCR have found that many hundreds of Debt Counsellors have left the industry due to it not being profitable or even sustainable. They would like to see the new fee structure address this as well as balance the needs of all parties including consumers. They would also hope that the new fee structure will address some gaps in the process and find ways to take these previously unconsidered functions of a Debt Counsellor be taken into account.

‘The NCR have found that many hundreds of Debt Counsellors have left the industry due to it not being profitable or even sustainable’

Though the NCR are still concerned about some companies that over charge for legal fees, they say they are unable to tell the legal fraternity what to charge. They did however, point to one particular case where a consumer who was paying around R1000 toward the debt once restructured but had to pay R11 000 in legal fees. This is obviously not an ideal situation and seems to be an outright abuse. In such cases, the relevant Law Society could be involved to address possible over charging, in line with their industry standards.

Guidelines Challenged at Court

court-4To date, the debt review fees charged by Debt Counsellors have never been regulated and though there are industry norms are not set in stone. The NCR have recently seen some of the guidelines they have issued (non-binding opinions) questioned at a court level so they would like to see the new fee structure become officially issued and binding as regulations.