Trends in debt counselling complaints which were closed still show that most of the disputes in the matters reported to the Office of the Credit Ombud were due to some fault, inaction or misconduct on the part of the debt counsellor, says head of the legal department, Reana Steyn.
In the last quarter, the number of complaints received by the debt counselling department decreased, although the number of complaints was still 12% higher than the previous year for the same period.
Indications are that in some cases debt counsellors do not take timeous action in their response to counter proposals; setting down matters for court; or negotiating with credit providers in order to avoid a termination of the matter. Once the credit providers lawfully terminate, it remains extremely difficult for the consumer to pursue the matter further.
“Consumers generally do not have the funds to instruct attorneys to attend to the defence of the further court actions against them and the credit providers often feel that they have been lenient for a considerable time whilst not receiving full payment on the account,” says head of the debt counselling department, Reana Steyn.
She also says there were some cases where the credit providers did not adhere to the debt review court order – and the debt counselling department received more complaints of this nature.
“The problem is that the account continues to accrue interest at the “incorrect” interest rate and it is only if and when this fact is realised by the debt counsellor or the consumer and brought to the attention of the credit provider, that the balance outstanding is recalculated in accordance with the court order,” says Steyn. “We again caution against this oversight.
Steyn says consumers are not adequately informed and made aware of the pitfalls of the process, as is evidenced by the number of consumers who claim to have lost money paid over to the debt counsellors or who did not realise that debt counselling is not an absolute bar to legal action and repossession of their property.
“We need more education in this regard and consumers must take care to obtain as much information as possible about the debt counselling process,” she adds.
As agreed with the other players in the industry, the members of the Credit Ombud and the Regulator, there is a strict process to follow before a debt counselling dispute may be logged at the Office of the Credit Ombud for investigation.
The consumer (or debt counsellor who is assisting the consumer to log the complaint) must first report the complaint to either the Debt Counselling Association of SA (DCASA) or the National Debt Mediation Association (NDMA). These bodies have been mandated to deal with complaints relating to debt counselling.
The NDMA or DCASA must be given at least 20 business days to resolve the dispute and thereafter, if not resolved to the satisfaction of the consumer, the complaint can be logged at the Office of the Credit Ombud. “Our call centre explains the process to consumers who are not aware of it and who contact our office with the intention to log a complaint,” says Steyn.
She added that the office will increase awareness campaigns to inform consumers about the services of the Credit Ombud. “Too many consumers have lost property or money because they simply did not know that free assistance is available to them once they encounter problems with their debt counsellor or credit providers whilst under debt counselling.