Debtfree Magazine Feb 2016 by Debtfree Magazine

South Africaâ&#x20AC;&#x2122;s debt counselling magazine

February 2016 www.debtfreedigi.co.za

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CONTENTS NEWS

MONEY MISTAKES

PI COVER

DC FEES

DEBT REVIEW AWARDS

SERVICE DIRECTORY

EDITOR’S NOTE February is a busy month for Debt Counsellors. The frenzy of December spending is past. The harsh realities of January and all it’s extra costs has hit hard and now it is time to take action. As a result, many people finally make the big step of getting help. If you are an SA consumer with access to credit then the likelihood is that you, like millions of other people, are struggling to handle both your debt and your monthly running costs. To change the situation you need to make some new plans. This month, Finance Minister Pravin Gordhan had the dubious pleasure of presenting his national budget speech to a bunch of nervous people. Foreign investors and rating agencies keep a close eye on these types of things and the tone of a budget can be an indicator of the government’s attitude toward the country’s debt. This year the budget was fairly conservative with less changes than some expected but with reduced government spending and plans to pay down debt. It is good to realise that even a country can have debt (not just you) and needs to budget accordingly. Budgeting in households is not a very popular past time but just because some people stick their heads in the sand doesn’t mean their debt will just disappear. Debt has a tendency to grow not shrink. It is something that needs to be addressed. Planning and allocating of resources is vital. When tough times come along or unexpected things (like a national drought or a flat tyre) your budget

has to be pliable enough to cope. So, if you have not recently had a look at your monthly spending or made a budget on how to use your funds, why not take the opportunity to do so this month? It won’t be fun but it will be revealing and beneficial. If you struggle with that sort of things, why not go to your local Debt Counsellor and have them work through your monthly budget with you? They can offer fresh perspective on your situation. This issue we look at not only the budget speech but all the other recent industry news. We discuss fee increases, PDA registration, a bunch of credit providers getting into trouble, spending mistakes you need to avoid, how some DCs and PDAs are helping consumers get through the tough ‘back to school’ months and more. Sticking your head in the sand is both bad for your back and for your wallet. Debt can be beat but you really do need to plan, budget and follow through to be successful in doing so. For some that means debt review or at least consulting with a Debt Counsellor and working on your budget. Don’t let your debt control you. If you are one of the many thousands of people who are under debt review, then make sure you stick to your monthly budget (including those savings) and let this month be one more step towards being debt free.

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BUDGET SPEECH

This area of government spending is a big one The end of last year saw the Rand take serious and the commitment to continue helping the knocks as confusion reigned over who would elderly and veterans etc is seen as a positive replace the suddenly fired Finance Minister. step. At the same time ratings agencies warned that they doubted SA could properly service Confirmation in regard to the (Cosatu its debt and curb spending. Thus all eyes were motivated) two year delay in certain aspects of on Finance Minister Pravin Gordhan as he the previously planned retirement reforms was given during the Minister’s speech. delivered this years budget speech. In what some have described as an uneventful budget that will calm international concern Finance Minister Pravin Gordhan presented few major surprises. While there were promises of reduced government spending, little else changed dramatically. There will be some moderate tax hikes on property sales (to make some more tax revenue) but nothing too hectic.

The most significant development for most people was actually a non development. It seems there will be no big hikes in personal income tax. This is a great kindness in an economy under pressure with half of all credit users now several months behind in their debt repayments.

The weak Rand (and sadly after the speech there was another dip), increased consumer There were some fairly usual increases in sins inflation and the national drought all got tax (people were somewhat caught off guard mention. Increased spending (and some legal when it was announced that sugar is now changes to allow for dealing better with the being added to the list. Thanks for nothing Tim drought) is planned to help those regions Noakes!) There were also increases in the fuel worst hit. Moodys rating agency has expressed their satisfaction with the proposed budget levy and a tyre levy. (which is a good thing). Particularly they were Pensioners and others on government grants impressed by the proposed government freeze will receive between R20 to R80 more than on non essential hiring and use of external last year (also a conservative increase). This contractors. means pensioners will now get R1500/month. While this is a very small increase, in the face of So basically, the idea is to try earn a little more, inflation, it is an increase…which is good news. deal with the unplanned drought and to spend

NEWS CONTINUED less wherever possible while trying to reduce by making a payment as per the final accepted proposal or granted court order. They say debt. Sound familiar? that no reply to their emails will be deemed to mean that the DC and consumer do not wish to avoid termination. Also any failure to make STANDARD BANK a catch up payment will result in the accounts PRE-TERMINATION being terminated (86(10)) from the Standard PILOT PROJECT On Monday the 22nd of February 2016, Standard Bank debt review process. Bank launched a pre-termination pilot project. What is that? Well, it is a process whereby Standard Bank Debt Review Department and PDAS UPDATE that their terminations team will be sending The present NCR recognised PDAs (DC out a pre-termination list to Debt Counsellors Partner, Hyphen PDA and NPDA) are warning in regard to their clients. Standard Bank say of a possible risks to the normal consumer that the list (in Excel format) sent to Debt debt review payment process due to new 5 Counsellors will consist of accounts which day payment window requirement and fee have been under debt review for more than schedule as created by the National Credit 60 business days but have no payments or for Amendment Act. The various PDAs have been which insufficient payment has been received. talking to the NCR and DTI non stop about challenges with existing payment processes Standard Bank then want Debt Counsellors to such as Debit Orders and Naedo payments. talk with their clients or the PDA in order to Even the Aedo authenticated collections figure out if the correct payment was made to channel Is not without cost problems. The the customer’s correct Standard Bank account. PDAs have warned that because of the high If, within 5 days, they receive notification from costs and the danger of payments being the Debt Counsellor that the customer did pay queried (and leaving the PDAs out of pocket however the money went into the incorrect to the projected tune of around R160 Million account, they will ask for proof and then they in the first year alone) collections via these will quickly allocate the funds properly. channels could suddenly be withdrawn. This would no doubt cause great chaos and If the customer did not pay, however they can problems for consumers, Credit Providers and make up the payment within the 5 business Debt Counsellors alike. days, then they will also not terminate the account. Starting another collections process The PDAs also feel that the amended fees is expensive and a lot of extra work and can be do not make allowance for the various other turned around with 86(11) applications. aspects of their service above and beyond just switching payments. For example; the PDAs The core purpose of the project and pre supply and maintain software (for payments termination list is to give customers an and for DCs to use to work out proposals), opportunity to bring their accounts up to date have query support call centers, have to write

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NEWS CONTINUED off debts and deal with consumer payment reversals (mentioned above). The 3 PDA’s have met with the DTI and the NCR and made various submissions in an effort to resolve the issues. Time has now run out for talk and the registration formal deadline has rolled around. Even though these issues are still ongoing (and could mean that the PDAs later stop taking payments in certain ways or even withdraw from the industry) at present all 3 PDAs have submitted applications to the NCR for formal registration in terms of the amended NCA. It is said that an additional 2 brave firms may also have applied to be registered.

NCT FEES DOUBLE

The National Consumer Tribunal (NCT) has the authority to hear certain debt review matters when a consumer is about to experience financial trouble. Many Debt Counsellors are able to make use of this provision to apply to the NCT to restructure their consumers debts as opposed to the courts (often for DCRS matters). The NCT have now announced that, in line with the Government Gazette of 4 Feb 2016, the filing fee for such applications has increased from R100 to R200. The change is now in effect (as of 4 Feb 2016).

DTI PROPOSE ANNUAL RENEWAL DC FEE INCREASE

DCASA made a submission proposing a more conservative increase of just over R200. Especially has the proposal been poorly received since the NCR recently flaked on reviewing the Debt Counsellors services fee schedule and the DTI failed to publish any costs during the amendments to the NCA. Many see this as an attempt by the NCR to cover the increased costs of their unnecessary plan to issue annual renewal certificates to all registrants. This has been described by some as unnecessary job creation and a huge risk to the debt review process particularly at court. The comments submissions date has now passed and the DTI will soon publish the new costs.

DCASA HAVE BEGUN THEIR REGIONAL MEETINGS

The Debt Counsellors Association of South Africa are the largest of the current Debt Counsellor representative bodies in SA. They recently began to hold their regular regional meetings across the country. The meetings have been well attended and matters such as the associations concern over the NCR’s ability to issue annual registrant renal certificates timeously have been hotly debated. A recent meeting also highlighted the concern members have that the NCR are not taking action against so called debt mediation companies that are offering unsafe and unregulated debt review services.

Much to the upset of Debt Counsellors across the country the DTI have published and called for comment on their plan to increase BDCF ANNOUNCE THEIR AGM the annual Debt Counsellor renewal fee up AND CONFERENCE DATE from R100 to R500. Their call for submissions The Black Debt Counsellors Forum, a Debt probably resulted in a plethora of hate mail. Counsellors association which promotes BEE in Reports show that Debt Counsellor association the industry , have announced that they will be

NEWS CONTINUED holding their annual general meeting (AGM) in April 2016. In line with their constitution the BDCF must hold an annual general meeting, report back and vote on certain matters including who will be on the National Executive Committee. BDCF have now announced that a National Elective Conference will be held in KZN (Durban) on the 8th and 9th of April 2016 to do just that. Due to membership changes and one of the former NEC leaving the industry there has recently been some confusion in regard to who was serving on the NEC. BDCF have announced a transition NEC containing 4 new temporary members from various regions. Namly: Musa Mlangeni (GP), Ettiene Human (GP), Kim Armfield (WC) and Romie Govender (KZN).

FAKE NCR EMPLOYEE SCAM

Debt Counsellors and consumers need to beware of a scam going on at the moment. Consumers are being tricked into paying money into the wrong account by people claiming to be the NCR (they aren’t). Apparently what is happening is that consumers are getting a call from someone claiming to be from the NCR (never ever deal with people on the phone without being able to verify their credentials). The person (sometimes using the name Solomon Mohaudi) tells the consumers that the debt counselling fees have been reduced and that their Debt Counsellor is ripping them off or not doing what the National Credit Act requires. The person then tells the consumer to reverse their monthly debit order or payment to the PDA. The so called “NCR” employee then gives the consumer a new set of bank details to use. The money then disappears. This means not only

has the consumer lost their money but they have broken their debt review arrangement and their creditors (and Debt Counsellor) will no doubt be upset. Consumers can then expect that some creditors could try to take legal action against them for not sticking to the arrangement that has been made through the courts. If you ever get a call from a stranger claiming weird things about your debt review please don’t just believe them. It could so easily be a scam. It is very easy to call your Debt Counsellor or go visit their office and ask them about any outrageous claims that someone on the phone makes. Beware of anyone who asks you to change bank details for a payment. If anyone contacts you always ask for the information in writing before you even think about acting on it. You know that the whole debt review process happens via court. It does not happen over night. Consumers have to sign lots off papers and swear affidavits and a Magistrate has to rule on the matter. With all of that in mind, it is unreasonable to think that you should then just trust some stranger who calls and asks you to change everything in 5 minutes without any paperwork or going to court. Debt Counsellors should warn their clients about this scam.

13 SMALL CREDITORS REFERRED TO NCT

Every now and then the NCR conduct raids along with the SAPS on Credit Providers about whom they have heard bad reports. This has lead to numerous arrests over the last few years. Even in 2015 there were a series of raids resulting in several naughty credit providers being arrested. What is then needed (and has been slow to happen) is for the NCR to

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NEWS CONTINUED refer the matters to the National Consumer Tribunal (NCT) to take action against these credit providers who are breaking the law. This is now the case for 13 bad Credit Providers, who were caught out for doing all sorts of dodgy stuff. These Credit Providers from areas such as the Eastern Cape (5), Bloemfontein (2), Rustenberg, Nelspruit, Dundee (KZN) as well as 1 from Gauteng and 2 from the Western Cape have now been referred to the NCT for a ruling. It seems these various creditors were overcharging consumers on their monthly fees and in some cases charging more interest on the credit than is allowed by law. There are also several cases of reckless credit involved. ‘Reckless Credit‘ is credit granted that (1) consumers cannot afford or (2) they do not fully understand. It can also involve (3) granting credit without providing the proper paperwork or (4) not doing the proper affordability assessments (regardless of the outcome). If consumers apply for credit and are not given a quotation (or pre-agreement) showing what it will cost then the credit granted is reckless. If consumers are given credit but were not asked to provide bank statements or pay slips and to give detailed information about their monthly running costs or other debts then, the credit has been recklessly granted. The NCT (and other courts) have the power under the National Credit Act to set aside or write off such debts. Some of these unscrupulous credit providers were taking peoples ID books and pension cards. Some even demanded the consumer’s ATM Pin codes and ATM cards. This is illegal. The NCT will hold hearings and after considering the facts, issue judgments. These can include deregistration of the credit providers (meaning they can no longer operate), orders to pay back the money (so

not only does the consumer not have to pay any more but they need to give the consumer back everything they already paid) and issuing heavy fines which can run into the millions of Rands.

NCR TO HOLD WORKSHOP IN WESTERN CAPE IN MARCH

The National Credit Regulator (NCR) have announced their intention to hold a workshop for Debt Counsellors in the Western Cape during March 2016. The NCR regularly hold workshops in various provinces to meet with and update Debt Counsellors in regard to the debt review industry (for example what is happening with PDA registration and DC Fee research), amendments to the National Credit Act or regulations and other current industry topics. The NCR have announced that their next workshop will be held in the Western Cape on March 15th. The workshop will take place from 8:30 till late afternoon and attendance is for registered Debt Counsellors only and by RSVP.

ABSA DEBT ORDER CANCELLATION ADDRESS MIX UP

Not too long ago ABSA shared their consumer debit order cancellation email address but it seems there was a mix up and the address in their industry wide email was incorrectly spelt. Please check the Debtfree DIGI Service Directory Listings Section at the back of the mag for the correct email address and other details on their current escalation process.

NEWS CONTINUED

LEWIS NEW CALL CENTRE

Lewis Stores has announced that they will be setting up a call centre to enhance compliance with the NCA. The new call centre’s function will relate to transparency and oversight of in-store sales and credit applications. The call centre will contact consumers during the process and explain costs and services before giving the OK for the sale to continue. This will be in addition to the local branches conducting mandatory affordability assessments and explaining costs. This, it is hoped, will increase consumer (and investor) confidence in their services and reduce any risk of reckless lending. The new and independent call centre will be staffed by 50 people at first and will begin operations in April 2016.

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5 money mistakes your bank app can help you avoid The last two months of the year can put severe pressure on your finances. For some people getting through it means taking more credit in the new year. Here’s how your bank’s app can help protect you from overextending yourself in 2016.

1. BUDGETING

A budget is your spending plan for your money. Having one gives you a clear view of what you’ll be spending your money on and how much you’ll be spending. Some banks’ apps have a budget tool to help you do this. If yours doesn’t, you can still use the app to view your transaction history and track your spending.

2. TRACKING YOUR SPENDING

It’s easy to overspend without a plan for your money. Using your app, you can sign in and view your transaction history anywhere 24/7, helping you keep track of your spending. You also don’t need to wait to go to a branch or ATM to do it, saving you time and money.

3. PAYING THE BEST FEES

You pay no bank fees on most app transactions. Your app should also use very little data per month, saving you bank and data fees which you could use to help repay a debt.

4. SAVING FOR EMERGENCIES

You can use your app to transfer money to your emergency savings account without going to a branch. An emergency savings plan can prevent your budget from being wiped out by an unexpected emergency, which could mean taking credit you may not be able to afford to cover expenses. For example, after being involved in an accident, you submit a claim to your insurer. They let you know that you need to pay an excess of R5 000. With no savings in place you could end up borrowing money to pay it.

5. PROTECTING YOUR MONEY

Use our app to pay people and accounts instead of withdrawing cash. Your app is secured by your unique PIN, and if you forget to sign out it does so automatically after a few minutes. You must never share your banking details and PIN with anybody. If you do, you could be a victim of fraud, and you might end up relying on credit to help you cover expenses and daily costs. Your bank will also never ask you for those details. Carrying as little cash as possible also helps keep you safer from attempted cash robberies.

ARE DC FEES THE ONLY FEES NOT GOING UP? The subject of professional debt counselling fees is a sensitive one. To date there are no published fees anywhere for Debt Counsellors to follow, other than the R50 application fee mentioned in the National Credit Act.

PAST

In the distant past, the Debt Counsellors Association of South Africa (DCASA) issued a fee guideline to their members which was seen as the industry norm for a number of years before some Debt Counsellors complained that they were not DCASA members and should not be held to those fees. Soon afterwards the National Credit Regulator issued a non binding opinion or guideline on what they felt the fee structure should be. It basically matched the DCASA fee structure. Over the last few years the non binding opinion from the NCR has been adjusted only once to allow for increased fees (and to add some info on what they thought should be charged in regard to matters set before the National Consumer Tribunal). Even when the NCA was recently amended, still no set fee structure was issued. That said, even though the guideline from the NCR is non binding, most Debt Counsellors today stick to the fee structure they suggest.

PRESENT

Recently a spate of increases in costs has hit Debt Counsellors. The application costs to the NCT have doubled and it seems that the annual renewal fee for Debt Counsellors looks set to shoot up to 5 times the current cost. Add to that other economic factors as well as plain old inflation and the current NCR non binding opinion on fees is really looking out of date. Debt Counsellors are not greedy. Research shows that most have reduced their personal salary by as much as a third in an effort to keep their businesses going. They are hiring cheaper and less experienced (and thus often less qualified staff) all in an effort to keep helping consumers who are in trouble. This is happening in the face of increased running costs and increased pressure from the NCR to train their staff more. That is why there was such great happiness last year when the NCR mentioned that they were hiring someone to review DC fees and report back to them. There was also corresponding great disappointment when the NCR later announced they had run out of funds for the year and could not go ahead with the research. The real sting came when the NCR soon thereafter sent expensive delegations of staff to the Western Cape to do the so called raids (with expensive outside contractors) on various large debt counselling firms (some who they already had an open investigation against for years and others who they already had matters with before the NCT). Add to that yet another expensive large advertising signboard by a train station in the western cape which vaguely warns people off doing debt review and all then all the necessary recent NCR research and submissions to the DTI in regard to annual renewal fees and it paints a poor picture in regard to where the NCRâ&#x20AC;&#x2122;s focus seems to be at the moment.

In response to a question Debtfree posed about the NCR’s ability to issue annual certificates (and their need for hiring a lot more staff to have capacity to do so without the industry hitting a huge backlog and chaos at court): one DC said: “ It makes sense that the NCR would focus on where their money comes from before that of a group of registrant”. Worried about the possible fall out, the Alliance of Professional Debt Counsellors warns that ‘ if the NCR cannot deliver, they will need to be held liable’. Other DCs have also expressed their doubts and concerns. At a recent DCASA meeting, where this topic was discussed, one DC said that they had never even considered the negative consequences delays in issuing of certificates could have. Now they were very concerned. This sentiment now seems to be an increasingly common one. Another common sentiment is that Debt Counsellors say that to offer a sustainable service to their clients they need to charge more for their professional services and need to be able to charge for certain aspects of the service they offer but currently can’t charge for (like reckless credit investigations).

FUTURE

When the MFSA complained about a review of the Credit Provider maximum limits and service fees the whole CP industry got some big shocks when the DTI published new maximum limits which slashed much of their profitability. The changes put some smaller creditors out of business almost instantly. That said, the DTI will be quick to point out that the changes did allow for an additional R10 monthly fee that could be charged, which was one of the original concerns raised by MFSA. The reduction in profitability was definitely not the desired outcome however the complaint (and legal action that MFSA initiated not once but twice) did see things actually get reviewed as required and the limits did eventually change. By sticking to their guns they moved the NCR and DTI to action. What is hoped, is that the DC fee review project has simply been on the back burner due to finance issues last year at the NCR and that it has now been given the go ahead for this year. Thus far, the NCR have not commented on the fee review*. Perhaps, they will do so at their first workshop of the year in Cape Town next month.

*We asked the NCR for comment but they have not yet replied.

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DEBT REVIEW AWARDS

Each year the debt review industry participate in an industry awards process. The Debt Review Awards recognise hard work and excellence by those Debt Counsellors, Credit Providers and Payment agents who are going above and beyond to help consumers. In past years, panels of industry experts have worked with submitted information to help identify which firms are excelling. This year, the process is being refined and expanded to allow for many more participants from across the industry to take part. With the help of online software, industry stakeholders are going to be invited to help identify those firms who over the last 6 months have been leading the way. This peer review system will help provide an unbiased and broad based indication of who are current market leaders. Debt Counsellors will weigh in on Credit Providers. Credit Provider will help review the performance of Debt Counsellors and both Debt Counsellors and Credit Providers will help evaluate Payment Distribution Agencies. At present the industry, through various associations and industry bodies, are helping clarify and refine clear criteria for each category of Debt Counsellor, Credit Provider and PDA. These clear, measurable criteria will be published on the Debt Review Awards website in March and will form the basis of who will come out on top. This will also help consumers better understand what it takes to be an outstanding Debt Counsellor or highly effective debt review department at a Credit Provider. As before, Debt Counsellors (and Credit Providers) will be compared only to other firms of similar size in order to promote fairness. Three different awards for the different size Debt Counselling firms will be handed out at the Debt Review Awards red carpet Gala. Awards to PDAs, banks, retail creditors, vehicle and micro finance credit providers will also be given out on the evening. The gala event, though modest, has been compared to the Oscars of debt review. This year the Debt Review Awards Gala will be held, in June, in Cape Town.

IN A NUTSHELL

DEBT REVIEW ONE PAYMENT IS A WIN FOR CONSUMERS

As a new debt review consumer, it must be quite overwhelming to make sense of the complexity of the debt review process as well as the role that different parties play in the industry. The Debt Review process is a legal process mandated by the National Credit Act (NCA) with strict oversight by the National Credit Regulator (NCR). The first positive step is to meet with a debt counsellor to establish whether you are over-indebted. If you decide to go ahead with the debt review process, another important consideration will be how you make your debt review payments. Payment Distribution Agencies (PDAs) make life easier for you. They collect one payment from you and distribute it to all your credit providers, attorneys and Debt Counsellors, according to your debt repayment plan. The National Credit Act recognises Payment Distribution Agencies (PDAs) as valuable role players in facilitating the flow of information and payments in the industry. As a consumer, you can choose to make payments to your credit providers directly. The question is: Why would you do this given the complexity and the risk? The more creditors you have, the greater the risk that you may default and prejudice the debt review process. Debt review is a complex, tightly regulated process. If you choose to navigate the system on your own, you need to be well aware of your responsibilities and risks. You are responsible for making sure that all your debt repayments are paid accurately, on time, and correctly referenced. If you pay the wrong bank account, or incorrectly reference your payment not only are you at risk of losing that money, but you are immediately at risk of termination. â&#x20AC;&#x2DC;Terminationâ&#x20AC;&#x2122; is when your credit providers terminate your debt review agreement and attach your assets to recoup their debt. This happens when consumers, fail to pay on time, short-pay or pay an inaccurate amount. Debt repayments may vary as a result of paid-up creditors, yearly escalations and end balances. As a consumer you will not necessarily be aware of these variations, putting you at risk of termination. Legally you are obliged to send monthly proof of payments to your Debt Counsellor for record keeping. This admin burden will escalate proportionately to the number of credit providers that you pay. Your debt counsellor will also require that their negotiation fees and aftercare fees are paid accurately and on time. Debt Counsellors will not issue you with a Clearance Certificate if after care fees are not fully up to date.

PDAs, like the NPDA, help you navigate this complexity by simplifying the process. They require one payment from you as a consumer and take care of distributing it to all your credit providers, attorneys and Debt Counsellor accurately and on time. All payments are paid automatically based on pre-defined rules as per your debt payment plan saved on their systems. The NPDA additionally validates all debit order and deposit receipts according to the banks rules of validation to ensure proper payment referencing. The NPDA also identifies incorrect or unscrupulous charges from credit providers and debt counsellors to ensure that all payments are made according to the agreed repayment plan and as per legal limits. Your debt counsellor and credit providers have access to all proof of payment reports. Should you run the risk of termination, for whatever reason, the NPDA often mediates between credit providers and Debt Counsellors who have reached a stalemate in negotiations, thereby reducing terminations and the repossession of consumer assets. According to Keditatile Legodi from the NCR: “Debt review consumers have a poor track record when it comes to making correct and on time payments. PDAs support and instill consumer payment discipline, resulting in a much higher payment rate than if consumers are left to their own devices.” If you are committed to the debt review process using a PDA is a wise decision. If you’re a Debt Counsellor, consider sharing this article with your clients.

IN A NUTSHELL is brought you by the DCM Business Partnership Programme™, designed to support debt counsellors and consumers during the debt review process, in collaboration with the National Payment Distribution Agency (NPDA). For help, contact the NPDA on 0861 628 628. If you have suggestions for topics that you would like covered in future, please email info@dcmgroup.co.za The NPDA was recognised as the industry winner for PAYMENT DISTRIBUTION and Care Premier as the industry winner for DEBT COUNSELLING SOFTWARE at the Debt Review Awards 2015.

PROFESSIONAL INDEMNITY COVER WHY YOU NEED IT Professional Indemnity Cover, also called Professional Indemnity Insurance, or Liability Insurance and is sometimes known as Errors and Omissions cover.

WHAT IS IT?

PI cover is a form of insurance for professionals, like Debt Counsellors, which helps in defending and settling any negligence claims in a civil lawsuit by consumers against your firm, for services you offer. The cover focuses on alleged failure to perform (an error or omission) which may result in the consumers financial loss. Typically such policies cover things like negligence, misrepresentation, violation of good faith and fair dealing as well as inaccurate advice.

DO YOU REALLY NEED IT?

Insurance is one of those things, that when a month goes by and you don’t need to claim, you stare at the invoice and think: why am I spending money on something I am not using? However should a serious error or omission occur in your service to consumers, then you will be so happy you do have cover, and so will your client. The truth is, Debt Counselling can be tricky. Those not involved in the industry might not fully appreciate that. Debt Counsellors however, are very aware of this fact. Not only do you have staff doing administrative tasks for you (in which they can make an error) but you also use outsourced service providers who might cause serious problems. You have PDAs, Attorneys and Advocates, not to mention those who your services interact with: the numerous Credit Providers and the Courts. With so many moving parts, and with your client’s financial wellbeing on the line, small errors can quickly result in huge problems. Imagine that while data capturing a matter on your computer system, a staff member mistakenly captures just one incorrect digit of a client’s credit provider account number. Funds then go into the wrong account and sit unallocated. Next, the credit provider takes legal action, resulting in the loss of the client’s vehicle (which they need in order to earn a living) before you even hear about it. This could mean that you, as the Debt Counsellor, can face a claim by the angry consumer against your practice, which you cannot afford to cover and still remain in business. Thus it is clear that such PI cover is absolutely vital, and in many cases can save your practice. Fortunately for Debt Counsellors, a number of SA insurers, such as In2Insurance, offer such PI Cover and understand the specific risks which Debt Counsellors face in this constantly evolving industry. The question is not: do you need it but rather, can you possibly offer a sustainable professional debt counselling service without it?

Looking for PI Cover? - Contact In2Insurance here: info@in2insurance.co.za

DEBT COUNSELLORS ASSOCIATIONS ANNOUNCEMENT BOARD

Branch Meetings: Gauteng, 9 March Kempton Park Golf Club, 11:00am Bloem, 29 April 2016, Tempe Golf Club, 10am

#DCFeesMustRise

ANNUAL CONFERENCE 17 August 2016 Emperor’s Palace www.dcasa.co.za

The 2016 National Conference will be held in Durban as follows: DATE: 8-9 April 2016 VENUE : To Be Confirmed The following members have been co-opted to the NEC until our National Conference: Musa Mlangeni - GP Ettiene Human - GP Kim Armfield – WC Romie Govender - KZN

www.bdcf.co.za

www.newera.org.za

We are embarking on a series of regional meetings. If you would like to attend please email secretary@allprodc.org Want to host a regional meeting? Email secretary@allprodc.org

www.allprodc.org

All professionals have professional indemnity if the unforeseen happens. Do you as a professional Debt Counselor have professional indemnity as stipulated by the ethical code?

086 111 2882

TELEPHONE 0861 112 882 FACSIMILE 086 605 9751 MOBILE 082 449 6856 EMAIL andre@in2insurance.co.za

www.in2insurance.co.za

FEBRUARY

NEWSLETTER

We hope all our members are having a busy February helping lots of consumers through what is going to be a tough year, economically. The recent Budget Speech highlighted the weak Rand, serious drought and rising consumer inflation. These and other factors mean we should prepare for a busy year as Debt Counsellors.

DTI Proposed R500 DC renewal fee & NCR issue of Annual Certificates Though no one likes to pay more for anything, the increased annual renewal fee may lend some additional credibility to our industry and hopefully (should the amount increase so drastically) we can expect more from our industry Regulator in regard to annual renewals and certification. There is, of course, a HUGE concern over the NCR’s stated plan to issue annual certificates. As members know, many courts are adamant that we must have an updated certificate in our court application and not just a proof of payment of the registration fees (despite recent declaratory orders about this topic). With this in mind, there is concern that if the NCR cannot deliver, they will need to be held liable as they are will then themselves be in contravention of the Act and could cause consumers to suffer catastrophic financial repercussions. Increase in NCT Application Costs The NCT have doubled the application fee amount. It is hoped that with a higher fee we should expect to receive a higher level of service. PDA Registration Those of our members who make use of the current 3 PDAs will be glad to know they are going ahead with registration with the NCR as per the recent amendments to the NCA. Registration will replace the previous service level agreements and will mean that PDAs are now held

to a higher standard. For those members (clients) who do not make use of them this is less of an issue however it is good to see the NCA being upheld. Industry Workshops The recent NCR/NCT/NCC 2 day workshops have been making it very clear that DTI is taking consumer rights and protection extremely seriously. The whole meeting is focused around the rights of consumers. DC’s must never forget that we are facilitators for a legal right (right to apply for debt review) for a consumer and we have very specific instructions in terms of Section 86 and Regulations 24 of the NCA which we need to stick to closely. Important Court Case: FNB v M Barnard. In line with this important court case, our members must take note that the NCR Fee guideline is only a non binding opinion/guideline. While this guideline does set out suggested fees and timelines for payments, DCs should beware demanding or taking fees to the detriment of your consumer’s financial position or even that of the creditors. This is the case even if the same creditors have signed industry agreements to the effect of when fees can be taken. Since the current fee structure has no legal foundation some courts have a very different view of the entire matter to the Regulator. Please note that the NCR issued fee guideline is just a non-binding guideline and has no actual legal standing. AGM And Regional meeting dates To be announced. Please check in on the Facebook Members Group for more info. We call on all members to contact secretary@allprodc.org to volunteer to assist in their local regions to help carry some of the workload. Many hands make light work.

CONTACT DETAILS FORUM: www.debtconcern.webs.com / WEBSITE: www.allprodc.org / FACEBOOK: www.facebook.com/AllProDC / TWITTER: www.twitter.com/AllProDC

The first months of the year can be a very tough time for vulnerable debt review families. The added cost of back to school goods can quickly break their budget leaving them exposed to the danger of defaulting on their debt review payment. This year with the help of our generous debt counselling community DCCS was able to ease the pressure for 15 different families across SA. We want to thank Debt Counsellors Renee Marais (Of Money Problem Solved), Bernidene Thieroff (of CS Debt Counselling), Alan Manshon (of The Money Clinic) and Johan Fourie (of One Debt). We also want to give a massive thank you to Payment Distribution Agency DC Partner for their extremely generous donation to several families. You are all stars! DCCS would like to invite you to become part of the caring Debt Counselling Community Support Program. Help keep vulnerable, deserving debt review families in the process. Contact admin@DCCSupport.co.za for more info on how you can help.

www.DCCSupport.co.za

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