Debtfree DIGI November 2015 by Debtfree Magazine

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

November 2015 www.debtfreedigi.co.za

Credit ProteCtion – debt review

SuRe SuRe

Applied to go under debt review? Restructuring your monthly expenses? why not insure all your accounts on the one Credit Protection?

Credit ProteCtion Credit ProteCtion – debt review – debt review we will contribute towards yourdebt accounts in the event of the following: Applied to go under Applied debt to review? go under review? Restructuring your Restructuring monthly expenses? your monthly expenses? • death – we settle the account why not insurewhy all your not accounts insure all on your the accounts one Credit on the Protection? one Credit Protection? • temporary disability – we pay the Debt Review payment for 6 months we will contribute we towards will contribute your accounts towards inyour the event accounts of the infollowing: the event of the following: • Permanent disability – we settle the account • death – we settle •illness the death account wesettle settle the • Critical ––we theaccount account • temporary disability • temporary – we pay disability the Debt –Review we paypayment the Debt Review payment • retrenchment – we pay the Debt for 6 months for 6 months Review payment for up to 9 months

• • •

Permanent disability • Permanent – we settle disability the account – we settle the account Critical illness • – we Critical settleillness the account – we settle the account At a rate of R perthe R1000, retrenchment • –2.95 we retrenchment pay Debt – our we pay the Debt rates are among thetobest and our Review payment for Review up 9payment months for up to 9 months

benefit structure is the best in the

At a rate of R 2.95 At pera R1000, rate of Rour 2.95 per R1000, our market. rates are among the rates best are and among our the best and our benefit structure isbenefit the best structure in the is the best in the market. market.

ContACt one oR youR debt Counsellor! 0861 one 266 562 ContACt oR ContACt youR one oR youR debtwww.one.za.com Counsellor! debt Counsellor! 0861 266 562 0861 266 562 www.one.za.com www.one.za.com sam Haasbroek:

082 550 7294

sam Haasbroek: sam Haasbroek: sam.h@one.za.com 082 550 7294 082 550 7294 sam.h@one.za.com sam.h@one.za.com

marijke wessels:

082 729 3833 marijke wessels: marijke wessels: 082 729 3833 082 729 3833 marijke.w@one.za.com marijke.w@one.za.com marijke.w@one.za.com

terms & Conditions aPPly

terms & Conditions termsaPPly & Conditions aPPly

ONE Insurance Underwriting Managers ONE Insurance (PTY) LTD Underwriting Reg(PTY) No. 1996/008987/07 Managers (PTY) LTD Reg No. 1996/008987/07 Underwritten by: ONE Insurance Underwriting Managers LTD Reg No. 1996/008987/07 Authorised Financial Services Provider Authorised FSP8783 Financial VAT No. Services 4370160501 Provider FSP8783 VAT No. 4370160501

Underwritten by: Underwritten by:

Authorised Financial Services Provider FSP8783 VAT No. 4370160501

A Member of

A member of the

A member ofGroup the

A member of the

Group

CONTENTS NEWS

Donâ&#x20AC;&#x2122;t Skip You Payment

Bank Bust over Securitisation Denial

R1.4 mil Home was Sold on Auction for R10 000

NCR Publicises Raids on Debt Counsellors

EDITOR’S NOTE Just when summer arrived and you finally got to forget about the looming energy crisis and promised increases above projection for Eskom next year the country gets hit by a drought.

bungling, NCR budget issues, Edcon getting into trouble, DTI draft fee caps published, Debt Counsellor Workshops, Association AGMs and meetings and rising Repo rates. Wait till you hear about how one bank sold a 1.4 million rand house for R10 000. What a month of news it has been. So, do you deal with your debt while everyone else starts to have fun or just forge ahead and blow every last cent? It is a tough choice. You may feel that given you are reading this Areas of major cities hit with water outages, magazine it is an obvious one. In fact, the end never mind rolling brownouts. The bad news of the year is one of the times when a lot less is that everyone is saying that food prices are people get debt help and those who are already about to skyrocket next year. All this set against under debt review often make poor judgment the backdrop of a Dollar which is kicking the calls and drop out of debt review. Before you Rands rear resulting in a repo rate increase and know it the end of the year will be here. Make you have the recipe for a tough 2016. The good wise choices. Stay in school, don’t do drugs news is that if you want, you can just bury your and don’t miss your debt review payments. head in the sand and simply try to have fun That certainly won’t help you get debt free. this December when the holidays roll around. After all why plan for tomorrow when you can have fun today? It is the credit culture after all. Buy now and pay and pay…and pay later. So many South Africans sadly are in this mindset. Watch out that you don’t get sucked in! This issue we delve into the NCRs recently publicised raids in the Western Cape. We also look at the new regulations which are changing the way creditors work out what interest rate they can charge consumers in 2016. We have a ton of other news stories: Securitisation

Switch to easy

• Individual, dedicated business bank account per Debt Counsellor • National Representation - regular office visits by skilled, trained agents • 24 hour access to system, including distributions data - from any PC, cell phone or tablet with internet access • Dedicated account managers for EACH Debt Counsellor

Agent: Petro de Beer e-maill: petro@dcpartner.co.za Cell: 083 6139 826 www.dcpartner.co.za

STEYN COETZEE

Professional Debt Counselling Attorneys

Tel: 021 872 1968 Fax: 021 872 2678

11 MARKET STREET PAARL

adri@steyncoetzee.co.za www.steyncoetzee.co.za

INDUSTRY

CONSUMER

NEWS FLASH For daily debt counselling news in 3 minutes or less visit www.debtfreedigi.co.za

FNB Workshop With DC’s

FNB recently hosted a workshop in Cape Town with local Debt Counsellors. The workshop was a chance for the FNB Debt Review Centre (which is located in JHB) staff to get to meet and interact with Debt Counsellors from the Western Cape. The Western Cape has the second largest concentration of Debt Counsellors in SA. The Workshop was held in the beautiful big glass FNB building in Cape Town CBD. Various presentations were made by several key FNB DRC staff including DRC Head, Athaly Khan who spoke about plans for the next few month, as well as, Sizwe Nxedlana, Chief Economist at FNB who spoke about how much trouble the SA Economy is in.

Lewis at the NCT

In July this year, after a lot of press coverage and public outrage, the National Credit Regulator (NCR) took Lewis and it’s insurance arm to task for making pensioners and disabled people pay types of insurance which they could never claim against. They have since gone on to visit many other creditors and find similar contraventions of the National Credit Act. Lewis have since committed to paying back R67 Million rand in fees and interest to clients. In July 2015 the NCR referred the matter to the National Consumer Tribunal (NCT) and asked for a big fine to be handed out to Lewis. To date the NCT has not given a date for the hearing.

NCR Taking Edcon to the NCT

The National Credit Regulator have announced that they will be asking the NCT to administer a big fine to Edcon for charging consumers a club fee on credit agreements. The NCR launched an investigation which turned up the fact that Edcon had been charging consumers a club fee on their credit agreement. Part of the issue is that Edcon had not noted it in their pre-agreement or quotation to consumers about their credit accounts. As such, the NCR will be asking the NCT to make Edcon pay back the money. This amount will be added to the brands recent debts and losses woes, which currently run to the tune of around R20 Billion.

Debt Counsellor Report Overdue?

All registered Debt Counsellors (practicing or not) are required to hand in a report to the NCR about who they have helped and how far along each matter is. This is the same information that Debt Counsellors are required to update regularly on the NCRs online website ncrdebthelp.co.za. The reporting period is for 1st of July 2015 till the 30th of September 2015. The report had to be sent to the NCR by the 15th of November 2015. Reports can be sent to: returns@ncr.org.za

NEWS CONTINUED

Lewis Expand African Footprint

what they are allowed to charge you. Recently the DTI published a new way these maximum fees will be worked out from half way through next year making it easier to understand what the effect on your monthly debt repayments will be. [ED- Read More about those changes in this issue] Economists anticipate more repo rate hikes during 2016.

The Lewis Group have announced that they have entered a deal to buy 62 different Ellerines and Beares stores for +- R250 million. The stores in question are located in Botswana (25), Lesothos (10), Namibia (21) and Swaziland (6). This means that Lewis will now have pushed the number of their branches in Southern Africa to an impressive 786 stores. Lewis already have 62 stores in other countries (starting back in African Bank Allow the 1960s) which currently bring in around Insurance Replacement 20% of the Lewis Groups total operating profit. African Bank have for a long time not wanted to allow consumers, who have signed up for credit life insurance with them, to switch to another insurance policy (which may be DCM Functions cheaper). While African Bank have, in theory, with Debt Counsellors The DCM Group (who help consumers always said consumers can take a different distribute funds to their various creditors while policy when they apply for credit with them (as under debt review) recently invited a number per the NCA), once that happened they have of Debt Counsellors and Attorneys to attend fought off consumerâ&#x20AC;&#x2122;s efforts to later change. functions around the country. At the functions Amidst troubles between the African Bank informative presentations were given focusing curator and the African Bank insurance provider on plans for 2016 and how the DCM Group this internal bank policy has recently changed. plan to help their clients see a better return on African Bank have now indicated that they will their efforts in the months that lie ahead. Also accept the ONE|SURE credit protection policy, discussed was the best ways to get consumers which is offered at a lower rate to consumers to pay their monthly debt review installments. under debt review.

Repo Rate Up

For the second time this year the Monetary Policy Committee has raised interest rates by adjusting the repo rate by another 25 points. This means that the rate at which the central bank lends money to the commercial banks (Like FNB, ABSA, Capitec, Standard & Nedbank) is now 6.25%. The banks in turn use the formula given them by the DTI regulations to work out

NEXT Donâ&#x20AC;&#x2122;t Plan To Skip YouR December Payment

South Africaâ&#x20AC;&#x2122;s leading Debt Counsellors

Donâ&#x20AC;&#x2122;t Plan To Skip YouR December Payment

December is one of those times of year when consumers under debt review often make terrible mistakes when it comes to staying in the process.

They feel that if they simply tell their Debt counsellor that they are not going to pay that somehow the Debt Counsellor will magically ‘take care of it’. Remember that even though you have paid a Debt Counsellor he does not specifically work for you alone. Consumer forget that the Debt Counsellor was the applicant in a court order which ordered that the consumer pay a certain amount every month. Sadly at this time of year many consumers decide they want to rather spend money on other things other than the mountain of debt which had them so stressed just months before. Things like gifts for family or maybe something nice for themselves. It is vital that consumers under debt review realise that if they short pay or miss a payment they will undo all the hard work that has come before. They will soon find themselves facing expensive legal action by creditors who will try to take their homes and vehicles away leaving them without transport or a home and deeper in debt than ever before with no last resort of debt review to help. Remember that a Debt Counsellor does not have the authority to arrange for you to simply pay whatever and whenever you feel. Rather a Debt Counsellor’s job is to help a consumer and their creditors go to court and get a court order restructuring their monthly debt repayments. In fact, if you do not pay your debt review you do not pay your Debt Counsellor for their monthly services and you may find they withdraw their services leaving you in a tough situation. Beware of being caught up in the media frenzy of promoting gift giving and buying of goods. This could cause you to lose focus and for the temporary pleasures of a few gifts you could lose your kids their childhood home. Don’t fool yourself into reasoning like the cheating husband that thinks if he is faithful for 11 months of the year that his wife wont mind if he only cheats in December. The creditors will mind if you miss promised payments and your debt review will crumble. If you don’t want to go back to hiding from unknown numbers and endless calls, sms’, emails and summonses the don’t even think about missing your December payment. Rather make plans now to enjoy yourself without unnecessarily spending funds meant for your debt repayments. Plan for free days on the beach, walks on the mountain, soccer in the park, get-togethers with family and friends where everyone brings something to share the costs. There are plenty of ways to enjoy December without ruining your debt review.

Bank Bust over Securitisation Denial A while back ,as the issue of securitisation became better known the New Economic Rights (New ERA) group called on consumers to ask their banks if their bond had been securitised. At the time, the so called shadowy banking practice was hidden from the public view and few people realised that their bond may have been bundled up and sold on to a 3rd party. When that happens it that it is no longer correct for the bank to try to press legal action on something they have sold. Presently around 10 000 homes are repossessed and sold each year by banks trying to make their money back. The question is are the right entities trying to collect and take legal action and are consumers being informed when their bond is securitised? Despite laws about telling people who owns your debt and the definition of cession â&#x20AC;&#x153;in debitiâ&#x20AC;? vs a cession etc many banks have been reticent to admit if a bond is or is not securitised even when asked directly. The issue continues to get media attention as consumers demand more info about their debts. Mr Jack Darier, a JHB Parkhurst resident in good standing with the bank, decided to ask his bank if his bond had been sold on to a 3rd party. He knew of another family member who had been involved in a securitisation debacle. The bank told him emphatically that it had not and essentially that they didnâ&#x20AC;&#x2122;t like his asking. The trouble was that almost at the same time the bank revealed in a Certificate of Balance (well known in debt review circles as a COB) that the bond had, in fact, been securitized and sold onto Blue Granite (a well known securitisation SPV ). Awkward! Mr Darier has since taken this matter to the Law Society and has laid a charge of fraud with the commercial crimes unit in JHB against the bank.

“ It always seems impossible until it is done” - Nelson Mandela Specialist Attorneys dealing with Debt Review matters Magistrates Court and High Court Matters

Tel 021 913 2514 Fax 0866070940 Email info@liddles.co.za PHYSICAL ADDRESS 7 Chenin Blanc Street, Oude Westhof Postal address PO Box 3407, tygervalley, 7536

How Their R1.4 mil Home was Sold on Auction for R10 000 Going, Going Gone!

When Mike Russwurm took out a bond so that he could fix up his home in Johannesburg the bank valued it at R1.4 million. But when times got hard he learned that the bank can be ruthless and change their mind about what the house is worth and his home was auctioned off for a paltry R10 000.

Falling Behind on Payments

In 2011, Mr. Russwurm fell far behind on his bond repayments. Soon the bank sent out a valuation expert in anticipation of taking legal action, who now valued the house (4 years later) at R500 000. This was less than the outstanding loan amount of R780 000. The bank pushed Mr Russwurm to catch up the whopping R140 000 he owed. They had been lenient in allowing so much time in going by and decided enough was enough. Soon the bank sent a summons and then got a judgment against the property which enabled then to put the property up for auction. At this point, Mr Russwurm and his family and friends raised R55 000 and then another R14 000 to pay toward the debt. This was not enough for the bank and they said that they still proposed to go ahead with the auction. This prompted Mr Russwurm and family to make an offer towards the remaining arrears (of R85 000) of R73 000.

Not Enough – So To Auction it Went

The offer was R12 000 short of what the bank’s attorneys were demanding and was turned down. The bank then proceeded to arrange to sell the house on auction. Several interested parties showed up. Though the bond amount stood at R780 000, an offer of R450 000 was made (which would leave Mr. Russwurm responsible for a shortfall of R330 000). The offer was later withdrawn on the day. Because this sale fell through the bank then forged onward a few minutes later and sold the property for R280 000. Again the new offer fell through because this bidder could not raise the required deposit. Not prepared to call it quits and perhaps run another auction on a different day the bank’s representatives finally accepted an offer of only R10 000 for the property. This despite the fact that the home owner had offered R73 000 which was

R63 000 more than the final sales price and R 1. 390 000 less than they originally evaluated the property at in 2007. The home owner appealed to the bank to rectify the situation and to rather accept his offer but it went unheard. His requests to the bank were met with curt responses to the effect that the property was sold due to his default on the credit agreement.

Learn From This Cautionary Tale

Many consumers feel that buying property is a “good investment” and will assure them of “future wealth”. However this commitment means that for 25 to 30 years the consumer has to make the right payments monthly no matter what or face possible legal action and losing the asset. More than that, if a home is sold on auction for less than you owe, you will end up responsible for the shortfall amount for the next 30 years. Basically, you will then be paying for property you no longer own for up to 30 years. Consumers need to be wary of stretching themselves too thin financially when taking on a bond and need to take action quickly when they hit financial snags. Debt Review or the sale of the asset or even sequestration are all possible options. Most consumers with bonds who enter the debt review process quickly feel the relief of not only protecting their asset but also reduced payment installments as the banks are willing to extend the bond term to help reduce monthly payments. Even if a consumer then later decides to auction off or sell their own property they can hold out for the price they need to cover their debts. It is always a dangerous thing to let a third party who has no interest in you sell off the property without a reserve price. Also it is good to realize that not every home should be kept when your financial situation turns bad. A house is a asset. As such, it is something that is able to help settle your debt situation. The challenge is that we become attached emotionally to property over time. Remember you do not live in Downton Abbey with hundreds of years of history. Things change and the sale of a house (or car) may be the key to your financial freedom.

Pay us R770 000 in Shortfall

Mr. Russwurm now faces the ridiculous situation where he owes a further R770 000 on the bond on a house he no longer can live in and which the bank sold for only R10 000. The NCR have stated that they want to see this practice of selling homes without a reserve price (which is currently totally legal in SA) stopped. Though not normal there have been some other shocking cases with homes reportedly sold for as little as R10. Investigations are currently underway into the bank auction process in SA.

Capitec Bank speaks about some common debt review challenges We spoke to Carolina Visser, manager of the Debt Review department at Capitec, about some common challenges in the debt review process. Withdrawal guidelines The background: The National Credit Act (NCA) introduced debt review as a debt relief mechanism for over-indebted consumers. The debt review withdrawal and termination process for a consumer or debt counsellor is not specified in the NCA, however a voluntary withdrawal process was previously developed by the industry (Form 17.4) to make the withdrawal and termination process easier. This process was overturned by court in the Rougier vs. Nedbank judgment, which called for a review of the previous process. The National Credit Regulator (NCR) announced new guidelines (Form 17.W) which came into effect on 19 February 2015. Important to note: A debt counsellor does not have the statutory right to terminate or withdraw from the debt review process. What Capitec Bank will accept Capitec Bank will accept and update our system after receiving the following: •Form 17.4; if it was issued before 19 February 2015 and the debt counsellor can provide proof that the document was sent to our offices before this date •Before the issue of a Form 17.2 (overindebted document) and a Form 17.W (a) were issued by the debt counsellor •After the issue of a Form 17.2 (overindebted document) and a Form 17.W (d) were issued, accompanied by the court order declaring the consumer no longer over-indebted. •After a debt review order was granted and a Form 17.W (c or d) was issued, as well as the copy of the court order (rescission order or order declaring the consumer no longer over-indebted) •Where a debt counsellor suspends his/her services we will require a Form 17.W (b). The process will continue as normal and the current debt counsellor will remain the debt counsellor on record Tip: Clients should be aware and informed about the full debt review process: the purpose and advantages of the process as well as the ways to leave the process. Transfers The background: A consumer may transfer from one debt counsellor to another, at any time in the process. A Form 17.7 should be issued to aid the process. The Capitec Bank process Capitec will only transfer a client when receiving a valid Form 17.7 document. Important to note: When a Form 17.7 is issued, the debt review process does not start over, but continues uninterrupted. Tip: Clients should be aware of their rights to transfer to another debt counsellor if they are not satisfied with their current Debt Counsellor’s service. Debt counsellors must follow the proper transfer procedure to avoid delays, which may result in termination. Terminations The background: If a consumer defaults under the restructured agreement, or the process have not been concluded, a credit provider may terminate the debt review 60 business days after the date on which the consumer applied for debt review. The Capitec Bank process Capitec Bank follows a collaborative approach to terminating debt review clients. Its aim is to rectify the situation and avoid termination. Before sending the termination letters, Capitec engages with the debt counsellors by email, listing all the reasons for possible termination. These emails are followed up with a telephone call for further feedback. Capitec also sends a SMS to the client directing them to contact their debt counsellor about their debt review status. Capitec only proceeds with the termination if the follow up doesn’t result in the required documents being received, or sufficient payments made (according to the restructuring agreement) to bring the client’s loan accounts up to date.

2016 Credit Fees & Rates Regulations Published Consumers can look forward to paying less for unsecured credit from May 2016

Dr. Rob Davies, the Minister of Trade and Industry has recently published the new limitations of Fees and Interest Rates Regulations in the Government Gazette. The new fee limits and the new way to work out the maximum interest rates, which can be charged on credit, were published on the 6th of November. This follows after the DTI published a notice back in June this year that they were planning to change the way that interest rates are worked out. The DTI felt that it was too hard for consumers to actually know what interest they were going to pay for their credit because the old formulas featured a 2.2 factor which made things tricky. They have now tried to simplify things for consumers particularly in the face of climbing repo rates (the rate the banks themselves get to borrow money at).

What the New Maximum Interest Rate Limits Look Like

Mortgages (bonds)

Credit Facilities

Repo Rate + 12% (per annum)

Repo Rate + 14% (per annum)

Unsecured Credit

Incidental credit sits at 2% per month

Repo Rate + 21%

Maximum Initiation Fees

A lot of people neglect the fact that when they take out credit the creditor can charge them a once off fee called an initiation fee. This should in theory cover costs associated with providing credit (such as staff and doing credit checks and affordability assessments…and maybe some profit). The amount that can be charged will also change a bit. The new regulations set out what the minimum and maximum allowable fees are.

Mortgages (bonds) R1100 Plus 10% of the amount in excess of R10 000. Maximum charge never to be more than R5250

Credit Facilities R165 Plus 10% of the amount in excess of R1 000. Maximum charge never to be more than R1050

Unsecured Credit R165 Plus 10% of the amount in excess of R1 000. Maximum charge never to be more than R1050

Monthly Account Fees

It seems that the spark that lit the fire (which was when Micro Finance South Africa [MFSA] took the matter to court to compel the government to review the fee structure as per the requirements of the law) got attention as well. Monthly account fees are now going to increase to R60 (up

The Debt Counselling industry demands hard work and constant innovation from all those involved. Only those who are truly dedicated to a sustainable solution prosper in the long term. If you have built up valuable experience in the industry and are wondering about the next step in your career, we would like to hear from you. We offer many opportunities from Earn While You Learn programmes to mentorship with the view of owning and managing your own business. We are also constantly on the lookout for those industry professionals who have built up numerous contacts in the industry with the various Credit Providers. Be part of tomorrowâ&#x20AC;&#x2122;s debt counselling and email us: careers@payplansolutions.co.za

Pay Plan Solutions is registered with the National Credit Regulator under The National Credit Act No.34 of 2005 and is a member of the Debt Counsellors Association of South Africa registration number DCASA0386. For more information and registration details visit www.payplansolutions.co.za and www.ncr.org.za or www.dcasa.co.za

www.payplansolutions.co.za

IN A NUTSHELL

Christmas - How bad is your addiction? This month a DJ on one of South Africa’s popular radio stations announced the store opening of a well-known international brand. Her pitch was “come on ladies the debit orders have cleared by now, it’s time to hit the mall and start spending.” I doubt this local celebrity is even aware of the over-indebtedness that many people find themselves in and the impact that her off-the-cuff comment may have had on fueling many young women’s habits of reckless spending. According to statistics from the South African Credit Bureau half of the 21 million credit-active South Africans are struggling to pay-off their debt. The shocking truth is that on average South

Africans are using 76% of their income to service their debt. A trigger, like the one provided by this DJ, is all uninhibited spenders need to justify a shopping spree. There are endless reasons to justify the trip: opening specials; the fear of missing out; a little self-spoiling; and the best one at this time of year, it’s Christmas. It is a scientific fact that purchasing things one desires results in a momentary rush of dopamine to the brain. This means you feel good every time you buy that something special you desire. “Dopamine is the chemical that mediates pleasure in the brain. It is released during pleasurable situations and stimulates one to seek out the pleasurable activity again – News Medical.” It is the same chemical that results in addiction amongst cocaine addicts. Retailers have known this for years, and over time this phenomenon has even crept into our ‘shopping language’. How many times have you heard? – ‘Feeling low? Take a dose of retail therapy.’ Making matters more complicated are the many emotions, associations, memories, and family commitments that people have around Christmas time, making it even more difficult to control spending. Christmas is a time for ‘giving’. This is emphasized over and over in the thousands of messages that people are bombarded with. The media glamorize this time of year. The glitter balls, the flickering Christmas tree lights, and the ‘jingle bells’ seduce people and as if in a trance they are led by the ‘pied piper of shopping dreams’. Yes, at the moment, caught-up in the emotions of spending and the thrill of the purchase you will willingly part with ‘hours of sweat and toil’ for the promise of ‘putting a smile’ on a loved one’s face or the best reason yet ‘spoil yourself, because you deserve it’. Christmas is a time for ‘giving’. But it doesn’t need to be a time where people overspend, on material things, and lose sight of what matters most in the long run. People overspend and become over indebted because they don’t make the effort to plan sufficiently and manage their loved one’s expectations. The alternative is to use your money over Christmas wisely, starting with your end of year bonus. If you are one of those individual’s fortunate enough to receive a bonus, take a significant portion and pay off expensive debt like credit card debt or put additional funds into your home loan. It will save you a lot more money in the long run. Plan ahead, this may seem obvious, but are you planning for what you can afford rather than what is desirable? Get your kids involved and make hand-made gifts. Give away a homemade cake, homemade

jam, a knitted scarf, a handmade teddy bear, or a plant that you’ve nurtured in your garden. If this proves challenging consider offering ‘your time’. Perhaps the recipient would value a ‘free’ massage or an outing to a local market, zoo, or inexpensive event. Sometimes the ‘gift’ of your time and making memories is the most precious; as everyone is so busy these days. Set a price limit with family and friends, shop around and don’t be afraid to suggest a secret Santa – they might find it a relief. And more important avoid the malls over this time of year. If you have to shop, go with a list and a defined budget and don’t get swayed by all the glamour, glitz and advertising. Imagine the relief of waking up early in January knowing that you planned wisely over Christmas and that your new year is off to a good start. The process of planning, being creative with your gifting, and making good memories, will perhaps provide a deeper sense of fulfillment than the fleeting effect of the dopamine kick that you can find with so much ease and temptation in shopping malls. Spend wisely this Christmas. If you’re a debt counsellor, consider sharing this article with your clients.

IN A NUTSHELL is brought you by The 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.

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?

011 622 9460

Telephone 0861 112 882 Facsimile 086 605 9751 Mobile 082 449 6856 EMAIL andre@in2insurance.co.za

www.in2insurance.co.za

ACCOUNTING

TAX

AUDIT

CONSULTING

telephone 079 888 7200 email info@bkfaccountants.co.za www.bkfaccountants.co.za

NCR Publicises Raids on Counsellors

Publicises Debt ounsellors

The NCR recently conducted a series of visits to various Western Cape Debt Counsellors. While that may initially sound exactly like the normal registrant monitoring visits conducted by the NCR these visits were quite different. The National Credit Regulator registers and monitors credit providers and debt counsellors on a regular basis. This involves members of the NCR monitoring team arranging to come visit the premises of the registrant and look over their operation and even a random sample of files. The idea is to check that the standards of professional service are being maintained and that the requirements of the National Credit Act (NCA) are being adhered too. These are known as â&#x20AC;&#x153;monitoring visitsâ&#x20AC;?. Normally these visits are friendly affairs with any issues that are raised then being sent in a letter to the registrant with a request to sort them out in a timeous manner. This allows the creditor or Debt Counsellor to take the needed action and offer a better service. Recently the NCR sent out a circular to the industry about some registrants not sticking to appointments that have been made with the NCR for one of these monitoring visits. This is obviously frustrating for the monitors who travel far and make a big effort to conduct the monitoring visits. It also means the company is not sticking to their terms and conditions of registration, which include being monitored.

The November Visits One of the big differences between the normal monitoring visits and the recent spate of visits to 11 Debt Counselling firms in the Western Cape was the use of warrants. Also adding to the martial tone of these visits was the presence of policemen, at some of the firms visited. The use of warrants and Policemen indicated that the NCR were, for one reason or another, expecting some resistance to their visit and requests for information. It also seems that the visits may have been organised more by the investigations and enforcement arm of the NCR than the usual monitoring section. There were unfortunately several issues with the warrants used (as to content, purpose, justification, wording and even, in one case, supposedly the wrong name on the warrant) but in all cases the companies visited

seem to have cooperated as normal when they receive a normal monitoring visit. The visits concentrated on asking staff about where leads come from, who was registered with the NCR themselves and taking electronic data away (though there were massive issues with that) by an outsourced service provider to the NCR. No doubt the NCR will have a very tough time trying to go through the data since much of it is on proprietary software for which they do not have licenses and the data may not be complete or as one concerned DC said may be taken out of context without the full client files. The NCR soon afterwards began referring to these visits as “raids”. They even sent out a press release to the media to that effect. Given the use of warrants and the presence of police this is not a surprising term. Over time the NCR have raided numerous credit provider firms (mostly small operations). Numerous arrests have been made during the raids and the breaches in the NCA immediately published in the press and the matters taken to the NCT. In the case of the November visits however no arrests were made. No breaches in the NCA have been reported and it seems that the raids were more of a fishing expedition to gather information rather than anything else.

Breaking Down The Press Release In their press release the NCR have said: ”The National Credit Regulator (NCR) in a special operation conducted raids on 11 debt counsellor firms in the Western Cape, who operate call centres. “ Here you can see the use of the word “raids”. Also mentioned is the fact that the DCs visited have staff who work on telephones. Though not stated directly the wording does make this look like it is a bad idea somehow. Next the press release goes on to talk about what “certain debt Counsellors” may (not are) doing. Though they only mention certain Debt Counsellors (in a broad way) the implication may be that these 11 companies in the Western Cape might be these “certain” companies. However, since no arrests followed it does not seem to be the case as yet. The press release says: ”It has come to the NCR’s attention that certain debt counsellors may be misrepresenting the nature and purpose of debt counselling to consumers, marketing it as a payment holiday or simply a means to reduce monthly debt repayments.” Is one of the principle precepts of debt review the reduction of debt repayments? Yes. It is one of the few orders a court may make in connection with a debt review. So this is a bit of a weird statement. The idea that when you enter debt review you get to miss payments is a totally incorrect one that most Debt Counsellors will immediately correct since Debt Counsellors collect the bulk of their fees from the payment of the consumer at the end of the very first month. If a Debt Counsellor asks you for money (cash) upfront beware! The NCR have issued non binding opinions on how fees are structured and they recommend that fees only be paid at the end of

the first month a consumer enters debt review. This is what most professional Debt Counsellors do. Don’t give someone money now for work they may never do. Especially is this true with companies offering so called “mediation” services (which they say are not debt review). Watch out! Pointing to the fishing nature of these visits the press release continues: “Jacqueline Boucher, Acting Manager: Investigations & Enforcement at the NCR says the focus of this operation was primarily on debt counsellors who operate call centres, to determine if there is compliance with the National Credit Act and to ensure that debt counselling is not being conducted by the call centre agents who are not registered as debt counsellors as this is a contravention of the National Credit Act”. It seems that the visits were not based on evidence in hand that these firms were doing any of these things rather that they might (may) be and the NCR wanted to check. What is weird is that the NCR could have done so simply by calling into the companies and posing as consumers and asking some questions or through the normal monitoring visits which they have regularly made with these larger firms over the years. The visits and subsequent vague press release raise several interesting questions which the industry will want to gain clarity on from the NCR in the months to come.

What are the exact functions of a Debt Counsellor? What is Debt Counselling? Is answering the phone the job of a receptionist or a Debt Counsellor? Is emailing a form to a consumer the work of a Debt Counsellor or their personal assistant? Can a Debt Counsellor use a calculator or a computer program to work out a proposal based on the consumers debt information or must they do so without such tools? Can a consumer talk to an employee at a debt counselling firm about their debt or can they only talk to a Debt Counsellor? Can the consumer talk to their creditor about the same information? What is the difference between and ‘agent’ and an employee? Debtfree posed many questions to the Regulator about these issues but the NCR were not able to reply in the weeks leading up to publication of this article.

We spoke to one DC who was visited about the whole unusual experience. Though wanting to remain anonymous he told us: “It is exasperating how the NCR uses heavy handed Investigations like this, instead of compliance visits, training and workshops for DCs, as it is implying Western Cape DC’s are guilty until proven innocent (particularly when the NCR sends out press releases regarding it). The job of the NCR is to regulate. This not only involves ensuring compliance with the NCA, but also to help, engage, educate and guide the industry, particularly for those of us who recently joined it. Of particular concern, is that until the NCR released their press statement, the ‘raided’ DCs had no idea what the Investigation was about, with them only being told it was due to contraventions of Section 44. The press release now specifies a concern of the use of ‘agents’. Surely a better approach to this issue, would be to engage with the relevant DCs, establish their process to see if they were using untrained ‘agents’, voice the Regulator’s concerns, educate and work with the DC to ensure those concerns are understood and provide a time frame within which to comply. All of which could have been done without ‘raids’ and search warrants. Most individuals who have become Debt Counsellors, have done so not to make their fortunes, but because they actually want to help people. The 80% of registered Debt Counsellors who are no longer operating is testament to this. Unfortunately the Regulator has now broken the trust relationship they had with these DCs, and considering they must make up 35% of the industry, this is of great concern. Debt Counsellors need to be the NCR’s eyes and ears on the ground, but these debt counsellors are unlikely to engage the Regulator proactively again, but will most likely only communicate with them via their attorneys. As all Debt Counsellors are aware, without ‘walking a mile’ in a Debt Counsellor’s shoes, it is extremely difficult to understand the complexities of debt counselling in practice, not just in theory. “ What is obvious to all in the industry is that it is important that consumers deal with qualified Debt Counsellors and debt counselling firms when seeking help with debt. Consumers going to unregistered firms who offer to somehow magically deal with debt outside of debt review are being taken for a ride and will probably end off worse than before (and out of pocket for fees they pay up front). What is also clear is that it is best to deal with a Debt Counsellor to get help as they have trained to assist consumers. The amended NCA also insists that Debt Counsellors staff be trained. What is not clear is why the NCR have used this super aggressive method of visits and publicly called them raids if not based on specific abuses, other than to stir the pot and try gain some media coverage. Could this have done more harm than good?

URGENTLY NEED TO SELL URGENTLY NEED TO SELL YOUR PROPERTY? YOUR PROPERTY?

REAL ESTATE AUCTIONS ARE FAST BECOMING THE PREFERRED ROUTE FOR SELLERS AND BUYERS. THIS WORLDWIDE TREND IS ALSO TAKING A FOOTHOLD IN SOUTH-AFRICA ESTATE AUCTIONS ARE FAST BECOMING THE PREFERRED ROUTE FOR SELLERS AND BUYERS. THIS AREAL SERIOUS SELLER WANTS: WORLDWIDE TREND IS ALSO TAKING A FOOTHOLD IN SOUTH-AFRICA  TO SELL TO A SERIOUS BUYER A SERIOUS SELLER WANTS:  TO SELL WITH A NON-REFUNDABLE DEPOSIT?  TO TO SELL A CONFIRMATION  SELL WITH TO A SERIOUS BUYER PERIOD TO CONSIDER YOUR OFFER  TO TO SELL WITH A NONON-REFUNDABLE SUSPENSIVE CONDITIONS  SELL WITH DEPOSIT?  A BUYER TO DELIVER RELIABLE GUARANTEES WITHIN A YOUR REASONABLE  TO SELL WITH A CONFIRMATION PERIOD TO CONSIDER OFFER PERIOD  TO SELL WITH NO SUSPENSIVE CONDITIONS  A BUYER TO DELIVER RELIABLE GUARANTEES WITHIN A REASONABLE PERIOD

IS A FAST AND COST EFFECTIVE WAY TO SELL YOUR PROPERTY PROVIDES ADDED BENEFITS FROM CERTAIN BOND HOLDERS IS A FAST AND COST EFFECTIVE WAY TO SELL YOUR PROPERTY

THE METHOD SELLING YOUR REAL THE ONLY PROVIDESOFADDED BENEFITS FROMESTATE CERTAINISBOND HOLDERS PRODUCT AFFORDING YOU ALL THE ABOVE. THE STRESS CAUSED WITH LENGHTY AND COMPLICATED TRANSACTIONS IS NOW SOMETHING OF THE PAST! THE METHOD OF SELLING YOUR REAL ESTATE IS THE ONLY

PRODUCT AFFORDING YOU ALL THE ABOVE. THE STRESS CAUSED WITH LENGHTY AND COMPLICATED TRANSACTIONS IS NOW SOMETHING OF THE PAST! FOR MORE INFORMATION CONTACT:

012 403 8360

FOR MORE INFORMATION CONTACT:

012 403 8360

Editable Text Editable Text Editable Text Editable

DTI Publish Maximum Insurance Caps

The Department of Trade and Industry (DTI) have recently published the schedule of maximum fees which they propose a credit provider (or their insurance firm) can charge consumers to insure their credit. Creditors want to insure that if you die they will still get their money back. This is why they insist that consumers, taking out credit, have to have insurance on their credit. In the past there was little regulation in regard to what a credit provider could charge a consumer for this type of credit life insurance. Many retail creditors in particular were found to be making up to a third of all their profit from insurance charges on credit they offered. This means that consumers have been paying a huge amount for insurance that most feel is over priced and under utilised. This type of insurance has one of the absolutely lowest claim rates of all types of insurance leading government to the conclusion that consumers donâ&#x20AC;&#x2122;t really understand this type of insurance or donâ&#x20AC;&#x2122;t know how to go about claiming this insurance. For example, most of these policies offer to pay instalments on a personâ&#x20AC;&#x2122;s debt for several months if they lose their jobs. However rather than make consumers aware of their rights in regard to this insurance, many creditors have rather set collections agents onto consumers and threatened legal action when payments are not received after a retrenchment. Recently the NCR also found that many creditors were charging consumers for types of this insurance that the consumer could never actually claim. Basically, they were taking money for nothing in return. For example; they were charging pensioners for cover against losing their jobs. The NCR have now referred several credit providers to the National Consumer Tribunal in this regard and millions are now being paid back to consumers. Consumer do have the right to replace the insurance offered by creditors with their own

insurance as per the National Credit Act. This is very rarely done. It has however become more prevalent among debt review consumers who have been using firms like ONE|SURE to rather pay much less for their credit insurance. The saved funds are then pumped into the consumerâ&#x20AC;&#x2122;s debt review to speed up the process. Though some companies have in the past been slow to come around, like African Bank, this has now also changed (with African Bank recently changing their fighting it mentality and accepting the ONE|SURE policy as a replacement). Some credit providers have been known to charge more than 3 times as much for this insurance than companies like ONE|SURE do. This has lead the DTI to develop maximum caps on the amount credit providers can charge for this type of insurance in an effort to protect consumers from abuse. The DTI have published the proposed caps in the Government Gazette for public comment. It seems that some concessions have been made when the current figures are compared with previous drafts of the fee caps. Still the rates suggested are much lower than what has previously been the norm.

The Draft fees basically look like this: R2 for every R1000 of a Bond or Developmental Credit R4.50 for every R1000 on a Credit Facility or Unsecured Credit or Short Term Transaction.

Credit

Unemployment payments toward the consumers debts must now last for at least 6 months and the total period if the consumer becomes permanently disabled. Also mentioned in the published draft regulations is that if creditors suddenly put up their fees to the maximum they have to be able to justify it.

Download the Draft Maximum Insurance Caps here: http://debtfreedigi.co.za/wp-content/uploads/2015/11/Gov-Gazette-Draft-insurance-caps-forpublic-comment-for-download.pdf Comments can be sent to Skumkani@thedti.gov.za Attention Mr Siphamandla Kumkani within the 30 days since publication in the Government Gazette (dated 13th November).

The National Credit Regulator (NCR) and South African Police Service (SAPS) have joined forces to bring illegal lenders and loan sharks across the country to JUSTICE! Justice was served in September, after the NCRâ&#x20AC;&#x2122;s investigations led to police raids of 21 suspicious lenders across the Cape and 5 ARRESTS!

How Does this Help You?

Have you ever given your ID book, pension card, or bank card and PIN to a lender, as surety for a loan?

That is ILLEGAL! Did the lender refuse to give these items back to you, when you couldn’t afford to pay the loan back?

They are CRIMINALS! If you need help getting your ID or card back, the Consumer Justice Group can help! The lender violated the National Credit Act (NCA), which means they committed a criminal offense and should be reported to the NCR and SAPS.

We are the Consumer Justice Group (CJG)! There’s nothing we get more of a kick out of than fighting to bring down reckless lenders and stopping them from bleeding you dry of your hard-earned money. We will report the illegal lender on your behalf and investigate the contract for anything suspicious. If we find that the loan agreement is UNLAWFUL, we can ask the court to declare it as RECKLESS LENDING.

This means you DON’T HAVE TO PAY THE LOAN BACK! So, if a loan shark, lender or credit provider is withholding your ID book, pension card, SASSA card or bank card from you, send us your phone number on our website: www.cjgroup.co.za and we’ll call you back, or you can just give us a call on: 021 007 1688

DEBT REVIEW AWARDS 2014

WINNER

DEBT REVIEW AWARDS 2015

WINNER WINNING 3 OUT OF 5 AWARDS

• CLIENT & CUSTOMER SERVICES • SYSTEM & SOFTWARE INTEGRATION FOR • INDUSTRY SUPPORT ENGAGEMENT 1. NPDA - Payment & Distribution

T REVIE

B DE

A AW

RDS WIN

2. Care Premier - Debt Counselling Thank you for your support. Software

GROWING YOUR BUSINESS

INCREASE IN PAYING CUSTOMERS

DRIVE YOUR BUSINESS SUCCESS WITH THE

DCM PARTNERSHIP PROGRAMME™ Adding value through innovation and partnership.

Better Payment Behaviour

To increase your revenue, contact us on 0861 628 628 or businesspartner@dcmgroup.co.za WWW.DCMGROUP.CO.ZA

Immediate Improvement in Collections

Consumer Protection Provided (DCM Protector Card™)

Consumer Support Provided

(24hr Stress Helpline; Bank Account Facilitation; Creditor Support)

Consumers Educated & Nudged

Leaders in creating sustainable financial wellbeing

Debt Counsellors Associations Announcement Board

The 2016 NEC Paul Slot Eugene Cilliers Gerhard Stoltz Russell Dickerson Tony Richards Mauritz van den Heever Charles Thembekwayo

www.dcasa.co.za

In alignment with the purpose of the NCA pertaining to Black Economic Empowerment, the BDCF is dedicated to achieve this purpose by being a constructive link within the Credit Industry for DCs who have committed themselves to the debt review process and the wellbeing of Consumers. Join us in doing so. info@bdcf.co.za www.bdcf.co.za

The small South African town of Kokstad has developed it’s own currency. It’s called K’mali and over 100 businesses are using it. Contact pietbosman@gmail.com for more details.

www.newera.org.za

We hope our clients and members have a great holiday at the end of this year. Consumers please don’t miss payments and DCs please contact us if you would like to become a member : secretary@allprodc.org

www.allprodc.org

DCCS are helping vulnerable debt review families have a little fun this holiday season. With the help of our sponsors we are giving deserving debt review families a small boost with Family Vacation Gift Bags. Our first family vacation gift bag on itâ&#x20AC;&#x2122;s way to a debt review family in PE. Bag includes R1000 pick a pay food and clothing voucher, R250 spur voucher and lots of fun games for the whole family worth R250. If you know a debt review consumer that deserves a gift bag please email admin@dccsupport.co.za so we can follow up.

DEBT COUNSELLING COMMUNITY SUPPORT

If you are a Debt Counsellor and know of a client who has hit a speed bump and might need a little help this month to not miss their payment chat to us about our 17.3 Project. Perhaps we can assist keep your vulnerable client in the process. admin@dccsupport.co.za

November

NEWSLETTER Almost There

Not a Member of an DC Association?

As the end of the year approaches, we want to wish We invite you to become a all our members a happy and member of the Alliance of relaxing holiday. Professional Debt Counsellors. Add your voice to that of other Debt Counsellors who insist Members on working in a professional Facebook Page Be sure to continue to visit manner according to the the dedicated members only requirements of the National Facebook page for all the latest Credit Act. Contact us about Alliance news and discussions membership at: secretary@ regarding issues we are facing allprodc.org and projects we are working on. We appreciate how active our members are in contributing. Thank You. CONTACT DETAILS FORUM: www.debtconcern.webs.com / WEBSITE: www.allprodc.org / FACEBOOK: www.facebook.com/AllProDC / TWITTER: www.twitter.com/AllProDC

Winner of the 2015 Debt Review Award: “Customer Support”

Why not switch to Easy? Contact us for Fast, Accurate and Effective payments: Agent: Petro de Beer e-maill: petro@dcpartner.co.za Cell: 083 6139 826 www.dcpartner.co.za

Service D

click the c

Debt CounsellORS

Support services

TRAINING

FINANCIAL

FINANCIAL PLANNING