Debt Counsellors were first reminded that their quarterly Form 42s are due this month.
Then some information about an interesting Declaratory Order that is being sought was shared. The case relates to induplum and NCA Section 103(5) so is a pretty big deal. The ruling in this case will hopefully help define where the word ‘default‘ applies with regard to debt review and Section 103(5).
The Credit Industry Forum
Both meetings enjoyed a Credit Industry Forum (CIF) update.
Currently, the CIF are talking about debt counselling fees. More specifically; when one of the fees should be drawn.
The NCR are looking into splitting the big initial fee that Debt Counsellors receive for their work into smaller portions or asking the PDA’s to hold on to the payment and split it up over several months.
They say they want to do this because some rogue Debt Counsellors are not delivering on the services required. The audience at the meetings feel that instead of targeting these Debt Counsellors for strict monitoring the NCR are going to make all other Debt Counsellors who do already stick to the guidelines and do the work suffer. They are worried it will not actually have any impact on these few Debt Counsellors in question.
DCASA and the National Debt Counsellors Association have asked for statistical proof of any such abuses to see if this is really an issue or not.
Almost all Debt Counsellors are nervous about a possible change to the first payment (it is half of the fees they receive throughout the “normally” 5 year long process). They are nervous because their suddenly slashed cashflow may put smaller practices out of business if they have to wait so long for payments.
‘They are nervous because their suddenly slashed cashflow may put smaller practices out of business’
The topic is no doubt going to be debated and all attendees were reminded that any change would have to be agreed to by all parties at the CIF, which at the moments and in the current format is unlikely. Guests were told not to panic.
One problem is that the PDAs are not legally allowed to hold funds they receive. They have a set amount of days to make payments within.
Also, the interest on such funds would belong to the Debt Counsellors and not the NCR (who normally gets any extra such interest or whatever from unlocatable funds etc at the PDAs). This presents a lot of book keeping challenges.
Changing Fees & Missing Fees
DCASA asked if the CIF discussion will review the fee amounts and missing fees as was initially thought based on the name of the CIF subcommittee.
The NCR have responded that that will not be possible. The CIF committee will simply be focused on the timing of the restructuring fee alone.
Legal Fees
The same CIF subcommittee are also talking about Legal fees. Here, it seems, the committee are not talking about the timing of such fees as stated in their reply about the restructuring fee for Debt Counsellors.
One thing that the National Debt Counsellors Association and DCASA wish to have clarified is that the legal fees are not paid for the outcomes of the legal work but rather the work itself.
Using DCRS
Then there was a discussion about some problems with smaller credit providers refusing DCRS proposals (this is a proposal based on a popular BASA approved automatically successful if applied style software calculator for debt restructuring).
The challenge is that some Debt Counsellors use the system to generate an “easily accepted” proposal with great benefits to the consumer. They send the proposal formally to all credit providers involved and 99% send back approval. But perhaps one smaller credit provider insists on some other structure of repayments (Eg. a higher interest rate).
‘But perhaps one smaller credit provider insists on some other structure of repayments’
When the various DCRS accepting credit providers see a change to the proposal which reflects that demand they may then reject these changes even if small and not directly effecting their repayments. This is because it will not 100% line up with the DCRS system and what it shows.
So, it is advisable where this situation does arise that the Debt Counsellor share the reason why the DCRS proposal has updated just that particular credit provider and note that everyone else’s proposal stays the same. Perhaps this will move the credit providers to accept the amended plan.
Capitec Bank
Capitec Bank seem worried about legal fees that delay payments to credit providers in month 3 of the process (or more). Obviously they do not have direct oversight over this as legal fees and the attorney agreement lies between the consumer and attorney.
They have also shared that they would prefer to see other insurances (non credit life) come off a different debit order and not along with debt review.
The Debt Review Awards 2024 Process Has Begun
A new round of peer reviews for the next year has begun and DCASA members and others are invited to attend an online workshop about the process on Friday 23rd November 2023. Check the Debtfree Website (and emails) for more details.
NCR Debt Help Issues
There have been reports of the NCR’s Debt Help System going down sometimes for days at a time.
When this has occurred some Debt Counsellors report some client files missing, others added and many transfer requests automatically processed. This concerns many Debt Counsellors and could result in fraud or problems for consumers.
Finally, guests also received a round up of the DCASA AGM. One of the highlights there relates to how DCASA and the National Debt Counsellors Association of South Africa have been cooperating on various industry related matters.