Check out your debt councillor’s credibility

2016-10-19 06:00

THE National Credit Regulator (NCR) is embarking on a “misleading advertising” campaign to educate and inform consumers about credit-related adverts that are misleading. The NCR has noted with great concern, debt counselling advertisements that are false and misleading to consumers, says Kedilatile Legodi, manager: debt counselling at the NCR.

These debt counselling advertisements are conducted in a form of SMSes, emails and phone calls usually promising consumers a saving on monthly installments by a certain percentage (predominantly up to 60%) before they conduct an assessment on the consumer’s finances.

When doing an assessment for debt counselling, some debt counsellors, who usually operate call centres, inflate consumer’s monthly expenses to reduce the amount available to repay debts. This is unethical, misleading and a misrepresentation of what debt counselling is.
A debt counsellor must first conduct an assessment of the consumer’s income against the living expenses such as school fees, groceries, etc., to determine the amount that can be used to negotiate reduced payments, explains Legodi.
“Consumers should be aware that it is incorrect for debt counsellors to promise specified upfront reduction of installments before conducting a proper assessment.

“Debt counselling is a debt-relief measure meant to provide relief to over-indebted consumers only. A consumer is considered to be over-indebted if money available after payment of essential expenses is not enough to pay all other debts.”
Legodi advises consumers not to go under debt counselling for reasons such as a “payment holiday” as they have an obligation to continue making payments.
Consumers should be aware that there are fees that must be paid when under debt counselling, and these fees must be disclosed upfront and in writing at the point of application by the debt counsellor, says Legodi.

Important for consumers to note is that the NCR registers debt counsellors in their natural and/or individual capacity and not as companies.
As a result, only a registered debt counsellor can assist consumers with the debt counselling application as per the National Credit Act.
“It has come to our attention that some debt counsellors are using call centre agents and administration staff, who are not duly authorised to offer debt counselling,” says Legodi.
“Consumers are advised to ensure that they know who their debt counsellor is throughout the process.”

Consumers who receive misleading SMSes and calls are asked to immediately report these with the names of the debt counsellors or their registration number to the NCR on 0860 627 627 or dccomplaints @ncr.org.za

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