Alliance of Professional Debt Counsellors calls for CIF to be Shut
The Alliance of Professional Debt Counsellors (AllProDC) have taken a firm stance against the Credit Industry Forum (CIF) after being snubbed by several CIF sub committees.
Who are AllProDC?
The Alliance of Professional Debt Counsellors began several years ago in the wake of a Western Cape Schism in the Debt Counsellors Association of South Africa (DCASA) over access to association accounting information. In a dramatic walk out several Debt Counsellors who filled leadership roles within DCASA quit and soon formed the core of a new association which called for close adherence to the National Credit Act (NCA) as a priority. The association grew to represent a small but active number of Debt Counsellors who shared the same goals. Over time many of the original members handed the reigns over to others as they either left the industry or had to focus on other matters. At present AllProDC are the smallest of 3 Debt Counsellor associations in SA. Since thier inception AllProDC have championed doing things as set out in the NCA and have encouraged the NCR to turn to the courts for clarity on section of the NCA that may confuse some. This has brought them into conflict with some credit providers and other Debt Counsellors who take a different approach. Recently their message has been receiving some push back from the National Credit Regulator as well. Particularly has this been evidenced at the NCR arranged CIF.
What is the CIF?
The NCA has been described as ‘not the best written’ Act or piece of legislature ever produced and does have several areas where it is silent on matters effecting the way debt review is done. As such the NCR has over time called for task teams and other parties to try help close the gaps that exist. The latest is the CIF or Credit Industry Forum. At first the CIF extended only to a few credit providers (such as BASA) and DCASA but has grown to cover many bases and try to be more inclusive. Additional Debt Counsellor associations were invited to join (AllProDC and the Black Debt Counsellors Association) and consumers got some representation in the form of the Black Sash. Other Credit Provider bodies also joined and an attempt is being made to get more legal voices onto the Forum as well.
The CIF have ratified the old NCR task team findings and have looked for some practical workarounds and solutions to common issues in debt review. Some issues have had no progress since inception like Section 103(5) but others have moved swiftly and the CIF have been able to make suggestions to the NCR.
The NCR are empowered by the NCA to issue non binding opinions on certain industry topics. The act only allows for these to be non binding (or an opinion that others do not have to follow if they don’t want) but it is hoped by the NCR that the industry will follow these opinions so as to create unity across the industry and simplify matters. One of the core features of the CIF at it’s founding was that it would not make any recommendations to the NCR that were not unanimous (thus the several drag in any Section 103(5) proposals). While at first this seemed logical it soon became clear that parties such as AllProDC did not see eye to eye with other role players within the CIF and this lead to several stalemates. It seems at some point this policy was changed and the CIF began to make proposals to the NCR who issued what they began to call guidelines (which admittedly does sound more official than non binding opinions). Strangely the NCR have indicated that they do intend to clamp down on those who do not follow these non binding opinions for some reason. Perhaps the phrasing or use of guidelines has confused some of the NCR staff members. Regardless a series of recent events at the CIF between the majority of members and AllProDC have brought matters to a head resulting in AllProDC calling for the disbandment of the CIF.
CIF Snub AllProDC
One point of contention among AllProDC members is that credit providers supply Debt Counsellors with a Certificate of Balance (CoB) rather than a full amount of the debt owed overall (incl all future interest and fees etc). AllProDC say that according to the NCA this is what credit providers should be supplying to Debt Counsellors when they receive a Form 17.1 saying a consumer is thinking about debt counselling. AllProDC say that this figure will help reduce any confusion among all parties including the courts and means that court orders can be made without having to reference an interest rate and avoiding any confusion at the end of payments.
When AllProDC raised the subject at CIF the subcommittee discussing the matter the committee closed down. Later when the topic came up again the CIF asked ALlProDC to discuss it at another sub committee and then another. Eventually when the topic was raised again at a final sub committee meeting recently the other subcommittee members held a quick vote and asked AllProDC to essentially stop pestering the committee about it’s views. This then lead to AllProDC walking out in frustration. As they say they were ‘ousted‘ and their right to be heard was ‘yet again denied‘. they were understandably upset. they then contacted the NCR in regard to the matter and asked for the situation to be resolved.
AllProDC Call For An End To CIF
Subsequently AllProDC have issued a press release about the matter and what it sees the many other issues regarding the current common debt review processes. In the media release they state that they have sent correspondence to the NCR demanding that the CIF be disbanded. This makes sense since it seems their voice is no longer welcome there. Some other members of the CIF have stated that AllProDC do not come with constructive alternatives but rather are obstructionist of the process and are always very negative. It seems in this particular case however that AllProDC did have an alternative proposal which was simply shot down before it could be discussed. AllProDC have also called on the NCR to withdraw the process as suggested in the 2009 NCR Task Team findings. Once again they are asking that the matters be referred to a court for a finding. As yet the NCR has not responded to them.
What is noteworthy is that the NCR have been busy at court with the Debt Counsellors Association of South Africa in regard to certain debt review related matters with a recent ‘declaratory order’ issued in the Bloem High Court just the other day.
Recently several normal, everyday debt review court cases have taken a strange turn as Debt Counsellors have been forced to pay “Cost Orders” amounting to thousands of Rands for what they say was just following the NCR’s (CIF proposed) ‘guidelines’. The Courts felt that the NCA had to be upheld and not the NCR’s suggested processes. For example the NCA and regulations are quiet on the amount of fees a Debt Counsellor can charge and the DTI has never issued a regulation on the topic since debt review began. AllProDC have pointed to these matters as the tip of the iceberg and that things need to be sorted out post haste before more Debt Counsellors end up being forced to pay such fines/ cost orders.
It does seem that there is a serious problem brewing and it remains to be seen if the NCR respond to the AllProDC demands or if they ignore it. It then remains to be seen if AllProDC follow suit with other Debt Counsellors and Credit Provider Associations who have taken the NCR to court over their concerns. In both cases the NCR has fought back hard and seemingly punished those parties who have taken a stance against them. it takes a brave soul to stand against the Regulator. For now, AllProDC have said they will boycott the CIF meetings until the matter is addressed.