March 2021 IDM Special Edition

STRESSED?
WAYS TO COPE
Issue 3 of 2021

EXCELLENCE IS DOING
ORDINARY THINGS
EXTRAORDINARILY
WELL
– John W. Gardner

WHAT MAKES US
EXCELLENT?
/ Unimpaired and automated PDA systems
/ Integration with top-ranked Debt Counsellor systems
/ Enhancing Debt Counsellor efficiency and sustainability
/ Best customer support in the country – queries are resolved within 24 hours
/ Strong compliance and best-industry-practice implementation is at our centre
Call Chris van der Straaten
Head of Hyphen PDA | 082 557 0437
Or call our friendly support centre on 011 303 0060 - Option 2
or visit our website www.hyphenpda.co.za

FROM THE
IDM DESK

THREE STEPS TO TAKE CONTROL OF
YOUR FINANCES IN UNCERTAIN TIMES
With the turmoil of 2020 behind us and a return to something
approaching normal in the first quarter of 2021, now is a good time to
take stock of your finances.
DebtBusters have seen at first-hand how the consecutive lockdowns and
government’s attempts to try and control the spread of Covid-19 and
the associated economic slowdown and uncertainty have affected most
people’s finances.
“Obviously, the consequences were most significant for people who
were retrenched, lost their jobs when businesses failed and those who
were self employed in sectors such as hospitality and tourism, where
opportunities to earn an income diminished or entirely disappeared,”
says Benay Sager, Head of DebtBusters.
For those who kept their jobs, payment holidays and successive repo
rate reductions provided relief, but in many cases, these were offset by
salary cuts and bonus and other payments that were either substantially
reduced or not paid at all.
The 7% contraction in the economy during 2020 was not as bad as some
experts had predicted and the 6.3% growth rate in the fourth quarter
is encouraging, but the country’s economy was struggling to achieve
meaningful growth even before the pandemic and isn’t out of the woods
yet.
DebtBusters cautions against complacency even if you’ve been lucky
enough to keep your job, managed to sustain an income throughout the
disruption or are now able to start earning again.
“Although things may seem to be returning to normal, it’s still a very

difficult and uncertain environment. While there’s nothing you can do
about external factors such as a third wave, by controlling what you can
you’ll put yourself in a better position to deal with any setbacks as the
economy starts to recover.”
These following three steps are suggested:
1. Assess where you stand financially
Do an honest assessment of your financial situation. It may sound
daunting, but other than taking a bit of time it’s easy thing to do and will
give you a perspective on where you are, help you set some goals and
keep track of progress.
There are plenty of financial online tools available to help you such as
www.debtbusters.co.za/tools-and-advice/budget-calculator/
Alternatively divide a sheet of paper into two columns and list all your
income in the left column and all your expenses on the right.
Be as honest and thorough as you can. Your bank statements for the past
few months, bills and receipts can all help build an accurate picture of
how much you’re spending and on what.
It should give you an idea of where you may be able to reduce some
expenses, which debts to pay off – ideally start with short-term debts with
the highest interest rates – and take more control of your finances.
Ideally you should do the exercise each month, but at least every quarter.
Having done it once it’ll take you less time when you do it again.
2. Set goals
These will differ for everyone depending on your circumstances. For
some it may be planning to pay off short-term or unsecured debt, for
others it could be starting an emergency fund to cover unexpected
future expenses, while those with some disposable income may consider
investments as a good way to grow their money.

The important thing is to be realistic. Setting achievable goals and
meeting them will encourage you to keep trying. It’s better than setting
yourself a huge challenge, getting disheartened and ultimately achieving
nothing.
It may be as simple as settling an account or outstanding debt. Start
with the one with the smallest balance. Once you’ve paid that off, begin
replaying the next smallest one and so on.
Eventually you may get to a position where you’re able to save some
money each month. Then you might open a tax-free savings account and
see how close you can get to saving the maximum R36 000 a year which
SARS allows tax free.
3. Don’t delay if you need help
If your assessment finds that your monthly expenses exceed your income
and you can’t find a way to rectify this, you may need expert help.
All reputable debt counsellors provide free debt assessments. This will
show whether or not you need to consider a debt-management solution
such as debt counselling.
“Avoiding or ignoring the problem is a common reaction when people
are struggling with debt and have fallen behind on paying for a home
or a vehicle, but it’s not a solution. There are options, but it’s important
to act before you face the possibility of having your house or car
repossessed,” says Sager.

POPI-PROOF
your PROCESSES
WITH DREX
Secure system-to-system data transfer
(no human contact)
Elimination of data exposure from the
use of email
Data specification is fit for purpose
^
DID YOU KNOW?
The President of South Africa has proclaimed the POPIA commencement date to be 1 July 2021.
POPIA applies to any company or organization processing personal information in South Africa.
Fines for non-compliance with POPIA can range up to 10 million ZAR (South African rands).
POPIA defines personal information broadly as any information relating to not only a living person,
but also a company or legal entity.
^ ^ ^

FROM THE EDITOR
This month, we get to celebrate the 1 year anniversary
of the short, but essential, 14 day lockdown due to
Covid-19.
A whole year…Wow! Can you believe it?
A year ago, if you saw people wearing masks, you ran away from
them thinking they were crooks. Now, we run away from people not
wearing masks, in case they make us sick, how times have changed.
Will we celebrate a year of lockdown, or will we cry into our cups
bitterly thinking of all we have lost? It hardly seems like something to
celebrate.
It has been a really tough 12 months, that’s for sure. Last year 2.2
million people lost their jobs (and even though many got them back
as time went by and restrictions lifted) there are now 17.9 Million
people in SA who are unemployed. That’s one out of every 3 people
in the country. Tough times indeed.

Over 50 000 people have lost their lives and more than 1,500,000
are dealing with the after-effects of the virus. Even though vaccines
are becoming available, many have valid concerns; how effective and
safe are they, and how they are rolling out worldwide. It is all very
stressful.
That’s a topic we have a look at this issue: how you can deal with your
stress. Now, admittedly you are never going to escape stress entirely,
but we discuss how to get it under control. You might even pick up
some practical ways to reduce your stress levels.
We also discuss something that stresses a lot of people out: a review
of the fees for debt counselling. We look at what was done in the
past, and challenges with this process moving forward. It is a complex
riddle that faces those in the industry - finding a balance between
the costs of offering extremely professional help, and still not
overcharging the credit providers and consumers for the process.
We also look at local and international news impacting our finances.
It’s good to keep your finger on the pulse. Add to that the usual mix of
advice, tips, reviews and more.
It is funny how a full year of the Pandemic seems both long and short.
Time has dragged on, painfully slow and yet it has also flown by. It is
a lot like being in debt review, the process seems to take forever. You
feel like you are not making any progress and then suddenly, boom,
you have paid up all your debt. Wouldn’t that be something worth
celebrating? Imagine finally becoming completely debt free.

ONLINE
12 April 21
National Credit Regulator
Debt Counselling Training Course
CLICK HERE TO ENROL
Contact us for more info: 012 434 2500
www.enterprises.up.ac.za

CHEAPER OR MORE
EXPENSIVE?
Stats SA tracks many things including the rate of
inflation in SA. They can also look ahead and predict
what things will soon cost more or less based on
current trends.
Here are a few things that we can expect to cost more over the next
few months due to things like rising fuel costs and the Rand losing
strength to the Dollar.
Food
Fuel
Electricity
Alcoholic & Non Alcoholic Beverages
Tobacco
New Vehicles
By comparison here are the things where prices are staying the same
or possibly even dropping:
Education
Medical Insurance
Clothing
Rent

COPING WITH STRESS
C
NEWS
DEBT
COUNSELLING
FEES
O
NTENTS
DEBT REVIEW
SCHOOL
20%
DISCLAIMER
Debtfree Magazine considers its sources reliable
and verifies as much information as possible.
However, reporting inaccuracies can occur,
consequently readers using this information do
so at their own risk. Debtfree Magazine makes
content available with the understanding that
the publisher is not rendering legal services or
financial advice. Although persons and companies
mentioned herein are believed to be reputable,
neither Debtfree Magazine nor any of its
employees, sales executives or contributors accept
any responsibility whatsoever for their activities.
Debtfree Magazine contains material supplied to
us by advertisers which does not necessarily reflect
the views and opinions of the Debtfree Magazine
team. No person, organization or party can copy
or re-produce the content on this site and/or
magazine or any part of this publication without
a written consent from the editors’ panel and the
author of the content, as applicable. Debtfree
Magazine, authors and contributors reserve their
rights with regards to copyright of their work.

CONSUMER FRIEND
USES
SOFTWARE TO ENSURE
POPIA COMPLIANCE!
- Secure system-to-system data transfer (no human contact)
- Elimination of data exposure from the use of email
- Data specification is fit for purpose
POPIA COMPLIANCE IS
CRUCIAL THIS YEAR!

BREAKING
NEWS

1 IN 3 PEOPLE UNEMPLOYED
In South Africa, as the lockdown began (between April and
June – the initial Lockdown Period) 2.2 million people lost
their jobs. Over time, as lockdown restrictions eased, +-
900 000 unemployed people were slowly able to get old
jobs back or find new jobs.
By the end of the year however, 1.3 million people, out of
those roughly 2.2 million, were still unemployed. They joined
the 16.6 million other already unemployed people in SA.
SA now has it’s highest unemployment rate, sitting at 32.5%.
This puts SA’s unemployment rate in the Top 3 of countries
around the world (among countries that report on such
stats). Although different countries report in different ways
and figures vary over time the reality does not change that
SA is one of the most unemployed places in the world.
In further bad news a recent business survey of over 4377
SA businesses revealed that these companies have plans to
retrench another 1.3 million members of staff in the next 6
months.

We are the champion
in your corner!
DebtBusters provides a remedy for financially stressed
consumers through effective debt relief solutions.
Over 1 million South Africans who are facing tight
budgets and are struggling with debt, have come to
DebtBusters looking for a financial solution.
086 999 0606
info@debtbusters.co.za
www.debtbusters.co.za

MAN CAUGHT WITH
70 SASSA CARDS
A 47-year-old Durban man has been caught by the SAPS
at an ATM with over 70 SASSA cards in his possession. The
man had been drawing cash from the various accounts
when he was arrested. The man was acting as an illegal
credit provider and has illegally been taking the SASSA cards
from those who receive grants to repay loans. When the
man was arrested he had over R7500 in cash on him. His
fancy Mercedes-Benz was also seized by the police as part
of the arrest.
REPO RATE UNCHANGED
After this week’s SA Reserve Bank Monetary Policy
Committee meeting South Africans can let out a small sigh
of relief. The Repo Rate, which currently sits at a record low
of 3.5%, is not going to change for a little longer. This means
no immediate increase in debt repayments for those who
have credit. Repo Rate: 3.5%

8 MORE VBS LOOTING
ARRESTS MADE
Millions of Rand was looted from VBS Mutual Bank in one
of the most shocking South African Banking scandals of all
time. In the wake of the story breaking and reports into what
happened at the bank 7 people were arrested for their role
in the looting and fraudulent activity at the bank.
The case against these 7 has already been postponed as
more and more charges get added to the rap sheet of illegal
activity they were part of.
Now an additional 8 people have been rounded up in a
new wave of arrests. The new arrests also relate to fraud,
corruption, money laundering and racketeering at the bank
and related municipalities who were involved.
The investigators are planning even more arrests as the
evidence mounts against those involved.

DEBT REVIEW
EXPECTATIONS
VS REALITY
STRESSED?
WAYS TO COPE

COPING WITH STRESS
INTRODUCTION
We all face stress; work stress, debt stress, stress over
our health, the pandemic and more. To cope with
stress we need to think about how we think about
stress.
Let’s consider some ways we can adjust our thinking about stress, and
find better ways to cope and perhaps even reduce our stress levels.

COPING WITH STRESS
DEBT STRESS
Stress about money, money problems and debt is
extremely common. Concerns about money often lead
to the break-up of families, poor performance at work
and sleeping problems.
One thing that we can do to adjust how we think about debt stress is
to consider who really has the problem. If you loan your friend R1000
and they cannot pay you back when you really need the money, who
has the bigger problem?
You, who gave the money and now needs it back; or Them, who
spent the money and now really cannot pay you back, at this time?
The person who loaned the money, but now needs it back, has the
real problem. This is true in most creditor/debtor situations. If you
have borrowed money from the bank, and made use of those funds
to buy things, but now cannot repay them, the bank is the one with
the real problem, not you. This is why collections agents and the
courts are used, to attempt to shift the problem from them onto you.
Repeated calls and pestering is an effective way to get you to think
the problem is primarily yours, when in fact, it is mostly the credit
provider’s problem.
Thinking about things in this way can help you adjust your view
of your situation, and lower your stress levels, while you make
reasonable plans to repay the debt.

COPING WITH STRESS
STOP STRESSING
OVER THINGS YOU
CANNOT CONTROL
Each day we are confronted by things (small or
large) that stress us out. It is best to focus on these
immediate stressors, and not go about adding to these
things by worrying about future things that may never
actually happen.
Sure, you can somewhat influence the future by making wise
decisions now, but you cannot control how others will act. You
cannot control what the Corona Virus might do or how governments
might adjust legislation or how credit providers might behave.
Rather, it is best to deal with the actual issues in front of you today.
Do not weigh your brain down by worrying over things that you
cannot control and might never actually happen.

COPING WITH STRESS
BE REASONABLE
We often have high standards for ourselves and others.
Sometimes, however, these standards can be too high
and unrealistic. These high expectations could cause
us to become unhappy with ourselves or with others
when they always fall short of our expectations.
It is better to set reasonable standards for yourself. Know your
limitations and live up to them, only then try to see if you can go a
little beyond them. You would not ask a baby to do backflips at the
Olympics would you? That would be unrealistic.
Over time, as you slowly learn and grow, you can adjust and set new
realistic goals and standards for yourself and others.
Try to keep a positive, forgiving attitude and maintain a sense of
humour about things, especially when times are tough.

COPING WITH STRESS
LEARN TO IDENTIFY
YOUR STRESS
One key in learning to cope with your stress is to learn
to identify what it is that is stressing you.
Some of the main causes of stress may seem obvious to you: debt,
work, family. But that’s actually very vague. There are many people
who have debt and are not stressed about it. There are many people
who work a lot, but love their jobs. There are many people who have
big families but do not get stressed by them.
So, it helps to be more specific, what exactly at work is stressful,
which part of the workday? What specific behaviour by family
members causes you to feel stressed out?
It is also important to note that what stresses one person may not be
stressful to the next. You are an individual and your stress is unique.
So, you can’t rely on others to identify your causes of stress, you need
to take some time and actually think about it.
Once you know exactly what it is that stresses you out (in the
different parts of your life) then you can start to make plans to reduce
your exposure to these sources of stress.

COPING WITH STRESS
GET ORGANISED
Our brains secretly like things to be organized. We
find it pleasing to be in a neat and tidy house or room.
We even like people whose faces are balanced and
symmetrical.
Our brains also like things not only start but get finished. Disorder, in
our surroundings or our daily routine can be a big background source
of stress.
Try to get organized, make a schedule, stick to it. Make a list of all the
many things you need to get done and when you finish something,
tick it off. This will help you better manage your stress and avoid
being overwhelmed by too many things going on at once.
Having a list will also help you to choose which things are most
urgent and most important and which things you can leave to
another time. This is especially helpful if you tend to procrastinate.
Once you know exactly what it is that stresses you out (in the
different parts of your life) then you can start to make plans to reduce
your exposure to these sources of stress.

COPING WITH STRESS
FINDING BALANCE
If you work all the time, your family life will suffer. If
you play all the time your finances will suffer. So, try to
find a balance between work and relaxation.
People who eat healthy, sleep well and have good relationships with
others, they tend to be more productive and effective at their jobs
(even in shorter time periods).
Doctors will tell you that a little exercise goes a long way to having
good mental health. Eating and living healthy can help you avoid
many common traps, like returning to bad habits to try deal with
stress.
If you find your mental health is very poor, and you are having
negative thoughts all the time, then speak to a friend and to a medical
professional. Don’t delay getting help, seeking help is a smart move
and not a failure.

COPING WITH STRESS
PRIORITISE
As mentioned earlier there are benefits to making lists,
they can help you to quickly set priorities.
We often make lists and priorities in the back of our minds. Which
is more important to pay? Your home loan or your short term loan?
Your brain will quickly compare the two, as well as, the consequences
of not paying and tell you to protect the place where you live.
Making a list on paper (or digitally) will help you see all the things you
need to accomplish and decide which ones need to be done today,
tomorrow, next week or never. Cross off the ones you complete, and
then make a fresh list in a day or two and reorganize the items left
over. Some people do this daily and it helps them a lot!
Be sure to schedule time to relax, taking short breaks can energise
you and reduce stress.

COPING WITH STRESS
GET HELP
If you are very stressed, then your family and friends
can be a great comfort. Finding someone you can trust
and who is a good listener is very helpful in reducing
stress.
Why not ask people to help you with some of your many tasks or with
your workload? Even your kids can help around the house with small
things, which will make life easier.
If one of your work colleagues is a source of stress, can you have a
calm conversation with them in a relaxed environment and talk about
the exact reasons why they cause stress, and ask them if you are
stressing them out? If you can’t get that right, you can always try to
adjust things so you deal with them less often.
As mentioned previously, if you are too stressed out and cannot deal
with things on your own, get professional assistance. For example
if your debt is stressing you out, why not talk to a professional Debt
Counsellor. Having relationship problems? Have you spoken to a
counsellor? Do you need medical assistance to deal with your stress?
Ask for help if you need it.

COPING WITH STRESS
YOU CAN COPE
When you feel overwhelmed by too many things it can
be very stressful.
If however you can sit down and make a list of things you need to get
done, can take time to identify exactly what things are stressing you
out, and can then adjust your day-to-day routine to deal with those
issues, you will feel a lot more in control.
Talking to a friend or professional can also help you see things from
a different perspective. If you need help and get the assistance you
need, it will also greatly reduce your stress levels.
We can’t totally avoid all forms of stress, but by taking a few practical
steps, you can reduce and manage the things in your life that cause
you stress.

NCR FEE
GUIDELINE TO
BE REVIEWED

INTRODUCTION
The National Credit Act (NCA) came into effect all the
way back in 2007. The Act and regulations mention
fees that might be charged for debt counselling but
remained silent on what these fees might specifically
be.
Since there is no official (or legislated) fee structure, the industry itself
had to come up with figures that the majority felt were reasonable,
and would cover the associated costs.
Over time, various parties have come up with their own fee structure
and guidelines. For example, the Debt Counsellors Association of
South Africa (DCASA) issued a very popular fee structure which its
members and many others followed for some time.
The National Credit Regulator (NCR), who regulate the credit industry,
has also weighed in on the topic by producing guidelines on what
they feel is a reasonable fee structure. These NCR issued guidelines
have been the most popular (including among credit providers and
their DCRS software) and are currently followed by major industry
role players.

NCR FEE GUIDELINE TO BE REVIEWD
DCASA & THE NCR
FEE GUIDELINE
When the industry first started in 2007, the Debt
Counsellors Association of South Africa (DCASA)
fee guideline was perhaps the widest accepted fee
structure.
This changed however when, after a few years, the Competition
Commission said it was unfair for Debt Counsellors who did not
belong to the association, to have to stick to association specific fees.
This led to the NCR stepping in and issuing a very similar guideline
for Debt Counsellors (with some increases in the fee amounts). They
also asked Debt Counsellors to voluntarily accept these fees, as part
of their conditions of registration, and as part of the industry code of
conduct.
The NCR made their view on the voluntary nature of their guideline
clear when they said: ‘It is therefore the considered view of the NCR,
as the custodian of the credit industry, that all debt counsellors are
required to comply with the Fee Guidelines for Debt Counsellors,
which were issued by the NCR in 2011 so as to ensure that the
industry-agreed payment process is implemented uniformly
throughout the debt counselling industry.’

NCR FEE GUIDELINE TO BE REVIEWD
HOW DO DEBT
COUNSELLING FEES
WORK?
MONTH 1
A simple way to think about debt counselling fees is, that for most
consumers, half of all fees they ever pay for the process are paid to
the Debt Counsellor in Month 1 of the process (not upfront but when
the consumer starts to pay the new, reduced amount for all their
debts).
This has lead to a natural focus by Debt Counsellors on getting
consumers through Month 1 of the process.
EACH MONTH
The rest of the fees then come in small monthly payments during the
process. This small monthly retainer (which fund ongoing work and
reviews in the future) is known as an ‘after-care’ fee.
Over the years, the industry average has shifted up and down, with
each consumer’s situation being unique, but as an industry average
most consumers pay around R125 a month in after-care fees.

NCR FEE GUIDELINE TO BE REVIEWD
WHY WOULD FEES
NEED TO INCREASE?
The process that was at first expected to be simple,
where all parties would voluntarily cooperate has, over
the years, proved to be quite complicated.
In fact, due to push back from credit providers initially, the process
became very complicated and many additional steps had to be
introduced to account for their resistance.
Since 2009, the Courts have been included in every debt review (as
opposed to only being needed where one credit provider isn’t happy).
This meant that the initial fee guideline for debt counselling had to be
adjusted.
The inclusion of the courts and the legal side of things introduced
another snag. Attorneys do not fall under the authority of the NCR,
and because the Act and Regulations do not set out fees, it was left
up to Debt Counsellors and Attorneys to negotiate with consumers
about how much would be needed to cover legal fees.

NCR FEE GUIDELINE TO BE REVIEWD
THE CHALLENGE
WITH LEGAL COSTS
It is a hard thing to know up front if all credit providers
in a matter will or won’t agree with the proposals.
They may want to fight about things in court, or the
majority of the credit providers might like a proposal
but one may decide to fight.
Different courts have different requirements, which also complicate
things and Attorneys may end up going back to court over and over
about the same case (pushing up the amount they will bill). It is not a
simple thing to know what the costs will be.
To try to simplify things, many Debt Counsellors tried to make deals
with Attorneys to provide a set ‘standard fee’ which consumer’s (and
credit providers) could budget for in advance. This led to further
problems, as some consumer’s cases were simple while others were
complex. Did this mean that the Attorney was using some funds from
the simple cases to cover the costs for the complicated ones? The
consumer and Debt Counsellor were not privy to that information,
allowing each Attorney to run their billing differently.
Still, for a time, having a set standard amount for legal fees helped
give clients quotations and helped the Debt Counsellors and Courts
make debt restructuring calculations.

NCR FEE GUIDELINE TO BE REVIEWD
DCASA RESEARCH
IDENTIFIED A HUGE
PROBLEM
DCASA Research, presented back in 2014, revealed
a growing problem in the industry. It was becoming
more expensive for Debt Counsellor to help people
and the fees had not increased in several years.
To stay in business, Debt Counsellors were progressively paying their
staff less and less money. Debt Counsellors themselves were also
drawing smaller and smaller monthly salaries (an average of +- R11
000 in 2014). It also revealed that the process was now taking more
than twice as long as it had back in 2009.
This critical research revealed that reckless credit investigations would
extend the amount of work Debt Counsellors did, by at least 100% if
even a single case of reckless credit was possibly involved.

NCR FEE GUIDELINE TO BE REVIEWD
2016 CHANGES
In 2016 the NCR made some adjustments in their
guideline to the top end limit that could be charged of
the very small number of clients who ended up being
able to pay a lot of money each month toward their
debt.
Some other caps were also increased.
The guideline also solidified the idea that consumers who started,
but don’t carry on with the process, should pay for work already
completed by the DC (75% of the restructuring fees).
In that year, they also introduced what they rather controversially
labeled a ‘Legal Fee’. While the fee was indeed used towards legal
costs, the various legal bodies and entities already had official legal
fee rules, and the term in the guideline was seen by some as stepping
on their toes (or worse). It also highlighted the problem of a Regulator
trying to regulate an industry they had no direct authority over.

NCR FEE GUIDELINE TO BE REVIEWD
PROMOTING
RECKLESS CREDIT
INVESTIGATIONS
The NCA aims to reduce credit providers giving
consumers credit that they cannot actually afford. The
Act introduced big fines to the credit providers who
continued this practice known as reckless credit.
The Act also required that consumers be give documents they could
properly understand, that consumers be told exactly what they will
pay in advance and that credit providers would take proper steps to
do the math and ensure that consumers could afford the credit. To
fail to do so is also called ‘reckless credit’.
The threat of a credit provider being caught out for reckless credit
scares investors and shareholders. The NCR has been able to take
action against various credit providers who break these rules. This is
also something that scares investors. A famous case was where (old)
African Bank themselves reported that they had a small number of
reckless credit cases, originating at one of their KZN branches. Soon
afterwards the entire bank collapsed as shareholders ran for the hills
and stock prices fell through the floor*.
*There were other factors like a big book of bad paying debtors and company leadership jumping ship.

NCR FEE GUIDELINE TO BE REVIEWD
RECKLESS CREDIT
CASES IN COURT
Because of the need to keep investors happy and avoid
big fines, credit providers are quick to bring in big legal
teams to fight about any mention of possible reckless
credit.
This results in big legal battles at court, where the legal fees can
quickly exceed the actual amount owed. It makes sense to fight over
possible reckless lending for a R3000 loan and bring in a legal team
that will cost R50 000 to avoid receiving a fine of R1 million and
having your share holders get scared off, costing big credit providers
millions of rand in value.
Unfortunately there is no provision in current guidelines about where
these big additional legal fees should come from.
Some credit provider’s attorneys are unfortunately quick to ask for
costs against a Debt Counsellor who does their legally obliged job
if they mention possible reckless credit. Such fees could quickly put
smaller Debt Counsellor practices out of business.

NCR FEE GUIDELINE TO BE REVIEWD
AMENDING THE
ACT TO INCLUDE
COMPULSORY
RECKLESS CREDIT
INVESTIGATION
The current wording of the NCA only calls for such
investigations if the consumer expressly asks about it.
This has resulted in reckless credit not being a major part of debt
review. New provisions were included in amendments to the National
Credit Act a few years back. The changes require all Debt Counsellors
to investigate all accounts, and report to the court in each matter
whether asked to do so or not.
It also makes it a punishable offence for Debt Counsellors not to do
so. This was seen by many as the last step in getting rid of smaller
Debt Counsellors in favour of larger practices who could afford to do
this. Regardless, these amendments have never actually come into
effect, for some reason.

NCR FEE GUIDELINE TO BE REVIEWD
FEES TO
INCENTIVIZE
RECKLESS CREDIT
INVESTIGATIONS
In an effort to help promote reckless lending
investigations, the NCR pushed for a small fee to be
included in their 2018 fee guideline in the amount of
up to R1500.
Though this fee is a drop from the bucket towards the real cost, if
reckless credit is found, it was hoped that it would motivate Debt
Counsellors to more actively investigate reckless credit. Since the fee
was introduced, some firms began to charge the fee suggested by the
NCR. This, in many cases, meant that credit providers had to wait a bit
longer to get paid (since these fees were prioritized). Credit providers
immediately began to push back against this fee. They really like to
get paid as soon as possible so the consumers debts don’t grow, due
to the interest rates they add to consumer’s debts, during this time.
The NCR themselves later said they also wanted to take back this fee,
since Debt Counsellors had started to charge it so regularly.

NCR FEE GUIDELINE TO BE REVIEWD
THE COURTS
DON’T ALWAYS
LIKE GUIDELINES
One of the challenges that the NCR, as well as
Debt Counsellors, face is that since the NCA and
Regulations are still silent on the topic of fees for debt
counselling, some Courts have taken the stance that
the NCR’s very popular fee structure guidelines are not
legal and should not be followed.
Some courts even feel it prejudices credit providers or causes default
problems for consumers.
So far this stance has affected only a small number of courts, but has
proved rather difficult for Debt Counsellors who have followed the
NCR’s guideline on fees and been caught in the middle of the issue.
Some of the cases referred to in this article are Case No.A801/2014 Gauteng Division,
Pretoria FNB 7 Nedbank V Barnard & Coetzee. The NCR has however issued a circular saying
that the court probably didn’t mean what it said in its FNB ruling. Also see MFC v Joubert -
A629/2013

NCR FEE GUIDELINE TO BE REVIEWD
REVIEWING THE
NCR FEE GUIDELINE
AGAIN IN 2021
It was decided back in 2020 that a review of the fees
by the NCR’s Credit Industry Forum (CIF) should be
organized. At the start of 2021 this process kicked off
(just the first, baby steps for now) with the committee
beginning to talk about what is needed and agreeing
to certain goals.
What Seems To Be The Problem?
The NCR’s current concerns do not seem to be linked to inflation of
costs or labour. While the entire fee guideline will be up for review,
the NCR, in their CIF document, mention 3 sections of the current fee
guideline in particular that they would like to focus on:
1. The Restructuring Fee (paid in month 1),
2. The Reckless Lending Fee of up to R1500 paid in Month 2,
3. Attorneys Fees (meant to be paid when work is finished),

NCR FEE GUIDELINE TO BE REVIEWD
JUST LIKE IN 2018
The CIF have said that they will follow a process similar
to what was done when the fees were reviewed in
2018.
In that case, a smaller group of people made suggestions that were
converted into an official proposal. That proposal was then nicely
laid out in a document and sent out to the industry (for a few days)
for feedback, and then ended up being published as the new official
guideline.
It was unfortunate that in 2018 there was no upfront consultation at
the beginning of the process. Smaller Debt Counsellors and credit
providers only got to make rushed comments, towards the very end
of the process, on what was seen as a “done deal”.
It is hoped that this time, some attorneys (or legal societies) are
brought in to provide insight into their industry, and that more time
is allowed, earlier in the process, for meaningful proposals and
comments by more people.

DEBT REVIEW
LESSON #1
Even if under debt review credit
providers may have their collections
people call you. You can simply refer
them to your Debt Counsellor and end
the conversation.

NCR FEE GUIDELINE TO BE REVIEWD
A REVIEW IS A GREAT
OPPORTUNITY
Over the years these various guidelines have really
accomplished their goal of creating uniformity, and
have contributed toward stability in the industry.
Though often a bit too complicated, they have also greatly helped
consumers anticipate what to expect to pay, when entering the debt
review process. People want to know what it will cost, this is often
their first questions about debt review.
The current review provides the industry with an important
opportunity to make things both affordable and very easy to
understand for consumers, as well as sustainable for Debt
Counsellors.

CONSUMERS WHO
ENTER DEBT REVIEW
BUT THEN DON’T
FOLLOW THROUGH
In research from DCASA, some years ago, it was
revealed that just short of 20% of clients who enter
debt review never make any payments whatsoever
even though a lot of work is done on their behalf when
they start the process.
This problem still exists today.
This means that 1 in 5 clients never pay a cent for all the time and
effort spent on their behalf.
Imagine how your business would do if one out of every five clients
never paid you for what they bought. It is a scary statistic.
To further add pressure to Debt Counsellors, around another +- 20%
of clients drop out of the process in the following 2 or 3 months and
never complete debt review.

DEBT REVIEW
LESSON #2
If you receive a summons while
under debt review you must not
ignore it thinking you don’t need to
do anything. Immediately call your
Debt Counsellor.