In December 2016, three people were ordered to pay R180 000.00 in fines for failing to comply with debt counselling regulations. The fines were imposed by the National Consumer Tribunal (the “NCT”) after it was discovered that the guilty parties had been operating a debt counselling business, but had done so in contravention of compliance with the National Credit Act 34 of 2005 (the “NCA”). [National Credit Regulator v Joy Victoria Minnies, Mark Minnies & Nadeem Williams(NCT/21258/2015/57(1)]
One of the charges included failing to timeously refer debt review matters to court to obtain an order for the debt review arrangement. It is common that debt counsellors do not obtain court orders for their clients, even though they must apply to court within 60 business days of the debt review application being accepted. The adherence to this timeframe is especially important for the consumer as credit providers can terminate the debt review process and take legal action against the consumer if the consumer is in default under a credit agreement that is being reviewed in terms of the debt review process, at any time at least 60 business days after the date on which the consumer applied for debt review (Section 86(10)).
In addition, the National Credit Regulator’s guidelines on fees for debt counselling state:
“If a Debt Counsellor fails to submit proposals to Credit Providers or refer the matter to a Tribunal or a Magistrate Court within 60 business days from date of the debt review application the Debt Counsellor has to refund 100% of the fee paid by the consumer (excluding the application fee).”
Other charges included engaging in the services of a debt counsellor without being registered as a debt counsellor and also where registered, allowing other non-registered persons to perform debt counselling duties under the registrant’s NCR debt counselling profile.
The NCT became aware of the above transgressions after a consumer lodged a complaint because her creditors took judgment against her, despite her application to undergo debt review. Her paperwork was bungled by the debt counsellor and the consumer lost the legal protection against her creditors. As a result, she lost her house. The NCT also ruled that the consumer may institute civil damages against the debt counsellor.
In terms of section 57(1) of the National Credit Act 34 of 2005, the National Credit Regulator (NCR) applied to the National Consumer Tribunal (NCT) for the deregistration of two debt counsellors, namely the First Respondent, Joy Victoria Minnies, and the Third Respondent, Nadeem Williams.
The NCR’s allegations against the First Respondent, and NCT findings were as follows:
- Contravention of section 44(2) of the NCA, that is, engaging in the services of a debt counsellor without being registered at the time the debt counselling services were proffered. The NCT held that the NCA envisages a debt counsellor being actively involved and participating in every aspect of the debt review process. Simple administrative duties such as the receiving and filing of a document need not necessarily be performed by a debt counsellor. However, a debt counsellor must be actively involved in the entire process as a consumer expects to be assisted and advised by a registered debt counsellor throughout the process.
- Contravention of section 86(4)(b) read with Regulation 24(5) of the NCA, that is, failing to retain proof of the transmission of the Form 17.1. The Form 17.1 is the notification that the debt counsellor must send to the credit providers and credit bureau in which the latter are notified of the consumer’s debt review application;
- Contravention of section 86(7)(c) of the NCA, that is, failing to refer debt review matters to court. In terms of the NCA, the debt counsellor has 60 days within which to finalise the debt review process or the credit provides can terminate the process and take legal action in terms of section 86(10) of the NCA.
The NCR’s initial allegation against the Third Respondent was based on contravention of section 44(2). The NCR later clarified this allegation by stating that the Third Respondent was in fact guilty of allowing other parties to use his signature, name and registration number to process debt review applications. This allegation was upheld as it was noted that no debt counsellor may simply provide his electronic signature, name and registration number to be utilized without him or her being personally involved in every material step of that specific debt review application.
This case clearly reinforces the following debt counsellors’ obligations and duties:
- To timeously lodge and apply to court for a court order or to the NCT for a consent order, once the consumer’s debt review application is successful;
- To discharge his or her debt counselling tasks and not delegate such tasks to persons not registered to provide debt counselling services;
- To not allow non-registered persons to use his or her NCR debt counselling registration number or status to assist consumers.
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