OVERVIEW OF DEBT COUNSELLING PRESENTED BY KEDILATILE MALAKALAKA SAFARI INTO CONSUMER CREDIT 15 OCTOBER 2014

2  INTRODUCTION  DEBT COUNSELLING STATISTICS  DEBT COUNSELLING CHALLENGES AND SOLUTIONS  TRENDS AND INDUSTRY PRACTICES  THE CREDIT INDUSTRY FORUM(CIF)  NCR PROJECTS  CONCLUSION STRUCTURE OF PRESENTATION

INTRODUCTION  The credit industry was large and firmly set in its ways prior to the introduction of the National Credit Act (“the Act”).Over the past six years, the industry has seen many changes and initiatives particularly in the debt counselling space.  Industry agreements were negotiated to address shortcomings in the Act, problems with implementation of statutory provisions and the judiciary has repeatedly changed the debt counselling landscape.  It is against this background that we now have the National Credit Amendment Act. 3

INTRODUCTION(continued)  These amendments are intended to strengthen regulation to ensure effectiveness of the NCAA and to fully achieve the intended outcome of a fair, transparent and accessible credit market in South Africa.  For debt counselling, they have placed consumers in a more protected space to efficiently address over-indebtedness and will positively impact the role of debt counselors as the custodians of the process. 4

DEBT COUNSELLING STATISTICS 5 TOTAL REGISTERED DC’S

DEBT COUNSELLING STATISTICS(continued) 6

DC CHALLENGES AND SOLUTIONS CHALLENGESOLUTION Loopholes in the ActThe National Credit Amendment Act Process weaknessesWe established a forum called the Credit Industry Forum(CIF)to facilitate agreement and address aspects of operational nature which have a significant impact on the debt counselling process. This forum comprise of representatives from the credit industry. Lack of cooperation between stakeholders CIF is also aimed at fostering co- operation amongst stakeholders. 7

DC CHALLENGES AND SOLUTIONS(continued) CHALLENGESOLUTION Non compliance(At DC and CP level) Regular compliance monitoring activities Judicial interventionEngagement with the provincial civil court forums to discuss judicial challenges and to find workable solutions (e.g. Uniform guidelines which if available are disseminated to DCs).CIF is currently working on a solution to approach this at national level. Consumer behaviorAwareness and educational campaigns. 8

TRENDS AND INDUSTRY PRACTICE  DCs listing consumers under debt counselling without their consent.  Soliciting of debt counselling applications. DCs buy a consumer list from an unknown source and contact them to offer debt counselling.  The use and sharing of registration number with unregistered individuals.  Misleading marketing by debt counsellors (e.g. advertising that instalments can be reduced up to 50%) 9

TRENDS AND INDUSTRY PRACTICE(continued)  Proactive approach to debt counselling by credit providers as a relief measure for consumers.  Consumers making payments using incorrect reference numbers and not following up.  An increase on the number of transfers from one DC to the other. 10

THE CREDIT INDUSTRUY FORUM 1.PURPOSE  To facilitate agreement and address aspects of operational nature which have a significant impact on the debt counselling process. 2.COMPOSITION  This forum comprise of NCR and Association representatives from the credit industry.  Independent registrants participates by means of written submissions. 11

THE CREDIT INDUSTRUY FORUM(continued) 12 3.PROJECTS  Task team agreements of 2010-The subcommittee was established to review recommendations in order to issue as guidelines. The process was finalised and guidelines to be issued in due course.  End balance difference-The subcommittee was established to develop a paper providing a solution on how disputes relating to end balances should be treated. The proposed position paper was piloted with system providers, debt counsellor and credit providers and will be presented at the next CIF scheduled for sign off.

 Withdrawal from debt counselling- CIF subcommittee due to differing opinions recommended that NCR seek legal opinion and the opinion was received and deliberated on by the subcommittee on 14 October  Insurance whilst under debt review: The sub-committee developed a position paper which is in the finalisation phase on the process to ensure that insurance premiums are maintained throughout the debt counselling lifespan.  DCRS- Subcommittee is looking into operational issues as well as the hosting and management of the system with the objective of increasing usage by industry participants. 13 THE CREDIT INDUSTRUY FORUM(continued)

PROJECTS BY NCR  Guidelines on the application of section 103(5).  Review of industry codes of conduct.  Amendment of the current training course for prospective debt counsellors to include amendments and latest developments.  Exploring ways to extend and register the current debt counselling course as a qualification to benefit both aspirant and registered debt counselors.  Annual DC campaign informed by the latest developments in the industry. 14

CONCLUSION  Our vision is to implement and maintain debt counselling as a sustainable debt relief measure that leads to rehabilitation of over-indebted consumers without prejudice. A vision that we cannot achieve on our own but through open dialogue such as this and cooperation by all role players.  We will offer continued support to all role players to ensure that debt counselling is indeed an effective debt relief measure by serving its intended purpose. THANK YOU 15