NDMA becomes a Debt Counselling firm

NDMA crosses the line

The National Debt Mediation Association (NDMA)  has finally, after years of offering debt counselling, decided to hire a few debt counsellors. How is this possible you ask? Are they not prevented from offering debt counselling services since they are a body representing creditors such as the Banking Association of South Africa (BASA)?

Well, this has been the case for several years and has been a source of much dispute in the industry who were unable to see any distinction between the “mediation” services they offered where they helped consumers restructure debt and “Debt Counselling” (which only Debt Counsellors can offer).

After the sad end to their recent press war with the National Credit Regulator – which saw the NCR pull the rug out from under the NDMA and throw their position in the industry into obsoletion-  the NDMA have had to do some quick thinking. They have decided to continue offering mediation/ debt counselling but to cross the line from their credit provider roots to actually become registered debt counsellors.

This means that, in an ironic twist of fate they will now actually be reporting to and regulated by their former nemesis the NCR.

Changing sides

To enable themselves to legally offer service where they help consumers restructure debt they are having to make sweeping changes to their board of directors and their funding. The National Credit Act is very clear that a creditor or even their agent cannot do debt review. This will now mean that the NDMA will be directly competing with other debt counselling firms.  Some will no doubt say that this is an attack on the industry in a new way to try get smaller Debt Counsellors out of business. At the same time it is well acknowledged that their is plenty of space in the market for more debt counselling. Around half of all credit active South Africans probably need debt review and help sorting out their debts. Surely this means that their are plenty of clients who can use the services of Debt Counsellors large and small.

Irony?

It is now somewhat ironic that the NDMA who have constantly complained about the length of the legal process, the cost of the legal process and the problems that face the legal process will now find themselves having to follow that exact process. Where before they would have encouraged consumers not to pursue debt review and to try other non legal means to make arrangements with creditors they will now have to encourage consumers to do things as per the NCA . They have already mentioned that they will be sticking to the suggested debt review fees and hope to use funding to subsidize low income earners who have thus far been unable to make full use of  debt review. This was particularly the case when the NCR withdrew support and subsidies for these consumers. Is this a subtle dig at the NCR; another round of press war brewing? Let’s hope not.

The road ahead

Obviously, after so long sitting firmly on the side of credit providers and having said such terrible things about debt review in the past there will no doubt be a long road ahead before both consumers and fellow Debt Counsellors will welcome the NDMA with trust and open arms. This is something that may always haunt them and cause doubt in the minds of consumers. One things is clear however the NDMA have drastically restructured to try ensure their survival, only time will tell if this will be successful.