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Public Hearings at Parliament – Day Three

The Third day of Parliamentary hearings featured presentations by business owner, Capital Software, the National Clothing Retailer Federation and the Black Debt Counsellors Association.

Business owner Simon Mantell

The first presentation of the day was by local biscuit factory owner Simon Mantell. He discussed how his staff have been struggling with debt. In particular he would like to reduce the use and abuse of EAO or Garnishee orders as they are called. He had some very interesting proposals on how companies could assist their workers to consolidate their debt and manage repayments. Such businesses would register and report and not profit of the process. The idea seemed to interest the Committee but may be too ambitious for immediate implementation in the current Bill. The issue of “hidden” costs relating to insurance fees on credit and other fees on loans was also raised.

Capitol Software

Capitol Software made the shortest presentation, to date, taking only a few minutes to promote the use of their type of services over that of Payment Distribution Agencies. It was not surprising that Capitol Software raised concerns over the cost to consumers of using the Payment Distribution System. Previously theDCI (a web portal about debt counselling) had raised similar points relating to costs to a consumer via a PDA verse that of a switch. Paul Slot President of the Debt Counsellors Association of South Africa commented on the subject saying that the inclusion of PDAs into the Act should rather be seen as a victory since PDAs have been one of the success stories of debt review. Each month PDAs are currently distributing over R400 Million on behalf of consumers to their credit providers. Mr Slot says that the payment rate achieved by PDA’s is more effective than any other collection method. Capitol Software say that their cost are lower and services areas  efficient.

National Clothing Retailer Federation

The NCRF represent members such as Woolworths, Truworths, Edcon, Mr Price, Queenspark. In their brief presentation they gave support for the amendments and raises some points of concern. They would prefer that the industry itself produce a code of conduct that the Regulator then approve (rather than issue itself). They too are nervous about the proposed credit information amnesty.

The Black Debt Counsellors Forum

The BDCF focused their presentation on mainly 3 points of concern or interest: Voluntary Debt Mediation, Clearance Certificates and Sect 88(3)a

The BDCF came out strong in favor of voluntary forms of Debt Review as mentioned in Section 87(7)(b). They feel strongly then that Debt Counsellors should be able to offer voluntary debt mediation. Other parties must not be allowed to offer any such service since the Act mentions it specifically in connection with debt counselling. The wording of Section 86 now forces matters through the legal process (post- declaratory order).

In regard to clearance certificates the BDCF feel that it prejudices a consumer to wait for 30 years for their bond to be paid up before a clearance certificate can be issued. They wish to see the wording amended to reflect that a consumer can have some debts cleared through debt review but not need to have ALL debts cleared before a certificate can be issued. Otherwise these consumers could be excluded from the credit market for decades.

Due to changes in Section 86(10) and Sect 86(11) which talk about termination of accounts from debt review and re-inclusion, the BDCF highlighted that Section 88(3) needs to also specifically mention that it would apply to defaults on a credit agreement that is subject to debt review.

The session ended around lunch time and it was announced that tomorrow would see presentations by the Reserve Bank, Wonga and others. Fridays session had previously not been included on the schedule but the committee are determined to hear as many presentations as possible.