The office of the Credit Ombud has been working steadily, dealing with 2 988 disputes a year, to date. A total of 2 828 disputes were successfully investigated and finalised in this period. It took case managers an average of 40 days per case to close complaints dealt with in this period. The overall number of disputes opened (for all departments) year-to-date, increased by 15%, compared to last year the same time, as did the total number of disputes closed, which increased by 21%.

Credit Information Department
The Credit Information Department deals with all disputes relating to credit bureau matters. This department is headed by Cynthia Matshiakgotshi, who has five people in her team. Year-to-date, 1 458 new disputes were opened, and 1 484 disputes were closed in this time, with 31% of disputes being attributed to insufficient or incomplete information.  One of the main reasons for insufficient/incomplete consumer credit information is that active accounts are not being updated for more than three months, even though the consumer is paying monthly.

In order to improve reporting and minimise the challenge of incomplete information, it has been suggested that credit providers take extra care to ensure that all accounts are included in monthly data runs to the credit bureau. It is further suggested that credit providers perform exception reports to highlight accounts that have not been updated for longer than three months.

The effect of not updating information regularly is that a large percentage of accounts still reflect as ‘open’, with an outstanding balance due, when in fact the account has been closed and the balance is zero. To demonstrate this scenario, we share with you a recent case in our office. A consumer complained that she was declined credit by a certain institution, and claimed that she never missed an instalment and had a good credit record. When we investigated the complaint, it was confirmed that she had indeed never missed a payment on any of her obligations, but that she had 18 active accounts, and therefore could face an affordability challenge. When finalising the case, it became apparent that 14 of the 18 accounts that reflected as ‘open’, with an instalment and balance due, were in fact paid in full and closed.

The case was closed and the consumer received the credit she deserved. Not updating information does not only unfairly affect the consumer, but also the credit providers. Credit providers use credit bureau reports to perform affordability assessments, and these assessments will be incorrect if the information on the credit bureau is not updated regularly.

Cynthia Matshiakgotshi, Head of Credit Information

Non-bank Credit Department
The Non-bank Credit Department is staffed by a team of qualified attorneys who have expert knowledge of how credit providers operate and the various requirements of the National Credit Act. The department, which has been operating for two and a half years, is headed by Reana Steyn.
Year-to-date, 1 148 disputes were opened in this department – an increase of 69% from the previous year for the same period. It has taken an average of 42 days to resolve each case, and consumer savings amounted to R1 million.

A trend in disputes dealt with by this department is that a very large number of complaints revolve around account statements. Many consumers are not receiving their accounts, despite the fact that this is a requirement by the National Credit Act. Both consumers and credit providers should have measures in place to ensure that customer addresses are regularly updated, and that the most effective method for delivering the statement is used.

There are also numerous complaints about payments that do not reflect on statements, as well as incorrect balances and confirmations of account closures. These problems should be corrected without much effort on the part of the credit providers, by having effective call centres and trained staff to assist consumers with queries such as these, as consumers often approach the Ombud after their own attempts to resolve the issue have been unsuccessful.

Reana Steyn, Head of Non-bank Credit & Debt Counselling

Debt Counselling Department
This department is also headed by Reana Steyn, and retains qualified attorneys to deal with complaints. It was launched in April 2011, and its function is to deal with cases in which all other avenues to resolve the matter, such as going to the Debt Counselling Association, the Payment Distribution Association, or the National Debt Mediation Association, have failed.

Since the beginning of 2012, 382 disputes have been opened in this department, and it has taken an average of 55 days to resolve each dispute. As this department is relatively new, cases are still few and will increase over time.

As far as trends go in this department, a lack of communication with the consumer by the debt counsellor is by far one of the most common problems. Typical examples of this include:

• Consumers are not made aware of the amounts required by the credit provider in order for the proposal to be accepted;
• Consumers are not being made aware of the repercussions of not adhering to the payment agreement and, as a result, have to deal with the consequences of a credit provider terminating the deal – the consequences are that the credit provider will proceed with legal action and consumers incur the legal costs.
• Consumers not being made aware of the possible pitfalls of debt counselling.

The department also deals with certain cases in which it has been found that credit providers do not adhere to court orders. A recent matter that was dealt with was regarding a court order that had instructed the interest rate for an account to be changed from 18% to 6.5%. The credit provider, however, did not implement the change on their system, and the consumer was over-charged for a period of three years, until he noticed the mistake. In this case, the consumer was fortunate to have been able to calculate the interest rate used, but most consumers are not able to do this. Credit providers have the resources and systems to ensure that such mistakes do not happen, and much more effort should go into scrutinising debt review accounts in order to avoid this problem.