NCT Issue R1 Million Fine to Debt Counsellor
The National Consumer Tribunal has handed down a historic ruling against (former) Debt Counsellor Asia Lamara.
The National Credit Regulator (NCR) investigated complaints regarding the Debt Counsellor and the firm she is associated with – MSA and Consumer Financial Services.
After many visits over the years, some complaints resolution interventions and finally a formal investigation the NCR decided to refer the matter to the National Consumer Tribunal (NCT) and asked that they deregister the Debt Counsellor and issue a big fine.
Ms Lamara has been fighting back hard against deregistration and submitted extensive papers at the NCT to defend the matter. Ms Lamara did not, however, show up at the recent hearing of the NCT when the judgment was handed down.
Much of her legal defence revolved around differentiating between the promotional call centre MSA which contacts people and helps them to fill in applications (or to do applications on the phone) and the work done by the Debt Counsellor at Consumer Financial Services.
The NCR argued that consultants at MSA held themselves out to be doing the work of a Debt Counsellor (only a NCR registered Debt Counsellor can do specific functions (the NCR currently does not have a comprehensive public list of these items but the NCA & Regulations give broad descriptions of some). Though Ms Lamara argued that MSA simply sources potential leads for her and that her employees make use of NCR approved software to capture the info for her to evaluate, the NCT found this was not accurate. In some of the scripts of the call centre staff it shows that the consultants often said things like “i will now” do this or that or “i have adjusted the payment amounts”*. Since these consultants are not Debt Counsellors this is not allowed. They, therefore, confused consumers into thinking they were actually Debt Counsellors. They also mislead consumers as to what the Debt Counsellor can actually do and what the courts are really responsible for (eg. restructuring debt and declaring the consumer over indebted).
Many large Debt Counselling firms, that operate similar to how a hospital will have many doctors working there, employ dozens of properly NCR registered Debt Counsellors to ensure that consumers are dealing with qualified members of the team. This was seemingly not the case here.
The legal defence also included many other small technical points and often complained that the NCR’s papers were not up to the standard of those used at High Court. Since the NCT is not a high court (but has the same power when issuing rulings) they dismissed these objections.
‘these unsatisfied consumers have often had to turn to other Debt Counsellors for effective help’
Over time, consumers have lodged many complaints with the NCR and on public forums like Hello Peter against the firm (MSA & Consumer Financial Services) and these unsatisfied consumers have often had to turn to other Debt Counsellors for effective help. In some cases, consumers even complain that they have been signed up for debt review after just talking to someone on the phone and not really wanting to commit to the debt review process.
The NCT ruled that Ms Lamara no longer be registered as a Debt Counsellor. They further issued a historic R1 million fine. They also ordered that a full audit be done of all clients and that all fees be returned to the clients where needed. This could then mean that Millions and Millions of rands be returned to consumers.
Download the Ruling Here
Good For Consumers
Most Debt Counsellors agree that this ruling has been a long time coming and that it is a good one for consumers. They do not wish to see consumers who do not really want to enter the process somehow stuck with a debt review status at the credit bureaus. Debt Counsellors want to work with people who are 100% committed to getting rid of all their debt. They also do not like to have to take over matters from other Debt Counsellors where not all of the work has been done.
It is hoped that this will encourage consumers to make sure they are dealing with NCR registered professional Debt Counsellors when getting help with debt review. If you are dealing with a debt counselling firm feel free to clarify with the person that you are talking to if they are registered as a Debt Counsellor or not (if they do not immediately volunteer this information).
For more information on the case be sure to read this month’s Debtfree Magazine.
*for the actual wording discussed you can check the ruling document these phrases just show the idea - ie the use of "i" instead of the Debt Counsellor will.