Consumers do not have to apply for credit to check their credit report

This is an exercise performed by many consumers, to check whether they are in right standing with their credit. The purpose of the credit bureaux is to not only keep a record of your credit activity but to also provide you with a copy of your credit report, something that many consumers unfortunately are still not aware of.

During our consumer awareness campaigns with other financial Ombuds, government departments and regulatory bodies, the Credit Ombud came across several credit active consumers who did not know what a credit bureau is, what they do and how they can get a hold of them. Applying for credit to check their credit scores is quite a costly exercise and may even lead to further damage on your credit profile and credit score. Should they get declined upon application, then the real problem starts because they do not know how to get it fixed.

A consumer’s credit profile contains information relating to personal details, employment status and credit history. Should a consumer wish to apply for a loan or be extended credit for a furniture or a clothing account, the credit provider would request the consumer’s credit profile. This is one of the criteria set out in terms of the affordability requirements before a credit provider may extend credit to a consumer. As credit extension is about risk and costs, the best predicator of future behaviour is generally, past behaviour. Should a consumer’s credit record reflect adverse information, the consumer may be regarded as being a possible riskier debtor. For consumers applying for employment where the position requires honesty in dealing with cash or finances and the job descriptions of such positions are clearly outlined, the employer or recruitment agent may access the consumer’s credit profile.  Each time a consumer applies for credit, it will be recorded as an enquiry on their credit profile and the more enquiries reflect on your credit report, the less chances that you will be granted credit because it raises a red flag to your prospect credit providers.

The Credit Ombud would like to advise consumers on an easy and effective way to get a copy of their credit profile, where they will learn how easy it is to also dispute incorrect or outdated information on their credit profiles. Consumers are entitled to one free credit profile in any twelve-month period. Should they have already requested a report in that twelve-month period and require another report, the credit bureaux may charge them a nominal fee to obtain this. Upon receipt of their credit profile, we advise that the consumer go through the profile and where information thereon is incorrect or has not been updated, they may lodge a dispute with the different credit bureaux by contacting them back.

The National Credit Act, 2005 (NCA) requires that a consumer be informed before adverse information is reported to a credit bureaux. Adverse information belonging to a consumer shall not be submitted to the credit bureaux by credit providers and service providers without giving the consumer notice of its intention to submit adverse information concerning that consumer to the credit bureaux. The consumer must be given at least, 20 business days before the listing is placed on the credit bureaux.

Should a consumer wish to challenge adverse information submitted to the credit bureaux without having been notified by the credit provider or service provider, the consumer may lodge a dispute with the credit bureaux.

The Credit Ombud may proceed to investigate a complaint against a subscribing member upon confirmation of either of the following, ie the:

  1. 20 business days that the credit bureaux have to investigate the matter has expired and the matter remains unresolved and/or you remain dissatisfied with the outcome; or
  2. credit bureaux have reverted to you prior to the 20 business days with written feedback that they have credible information thus they cannot amend the information on your profile.

The types of disputes that the Credit Ombud may investigate may include:

  • Inaccurate or incorrect credit information;
  • Insufficient or incomplete credit information;
  • Out-dated credit information;
  • Notification or the lack thereof to consumers prior to listing adverse information as provided for in the NCA and more fully explained hereunder;
  • Listings in respect of prescribed debt, as defined hereunder;
  • Duplicate and/or double listings in respect of the same debt;
  • Service disputes – i.e. non-payment of an account or debt due to a dispute relating to service to which the account relates;
  • Listings in respect of claims or Court orders for damages and/or costs
  • Listings following incidents of identity theft and/or identity fraud.

For a consumer to receive a copy of their credit profile they may contact the credit bureaux by calling them, sending an email or through their website. If a consumer is not certain of the credit bureaux contact details, they may contact the office of the Credit Ombud and we will provide them with contact details to the major credit bureaux: TransUnion, Experian, XDS, TPN and VeriCred.

In these trying times, the Credit Ombud continues to save money for consumers! – Credit Ombud Annual Report

“I learned that courage was not the absence of fear, but the triumph over it. The brave man is not he who does not feel afraid, but he who conquers that fear.” – Nelson Mandela

Never did we imagine that there would be a year like 2020, where we would have to fight against an invisible enemy that took over our lives in within a short space of time.  It seemed that the world had succumbed to the disaster brought upon us by COVID-19 and efforts to try to stop the virus from spreading were met with resounding resistance because we continued to lose loved ones and our livelihoods.

Many industries saw a decline in profits and as a result had to close their doors. The Credit Ombud had its fair share of challenges with the COVID pandemic and though we still have our ‘doors open’, we saw a decrease of 45% in complaints and enquiries that came through the call center. This resulted in a chain reaction on our statistics as we saw a drop of 29% in the number of disputes opened and a 37% decrease in the number of disputes closed. The drop in numbers may be the result of 2020 being the first full year in which we no longer assisted consumers with credit bureau information relating to banking queries, and with non-member complaints being referred to the National Credit Regulator (NCR).

We continued to soldier on and remained positive, enforcing fairness in credit and credit bureaux matters. The office is pleased to report that results from the consumer satisfaction survey indicated that consumers rate their level of satisfaction at 85% and we also scored 90% for referrals, i.e., consumers who said they would refer someone else to our office. Despite the challenges experienced, we have saved consumers an amount of R 3,438,077.51 – this is monies that went back into consumers’ pockets. This amount is calculated by adding all the amounts where consumers overpaid or where we found some breach of the law which entitled the consumer to a refund or recalculation of their amounts owed. In these difficult times, every penny counts.

We are grateful for the constant support of the media and can report coverage in online, print and broadcast media to the Advertising Value Equivalent (AVE) of R 32,858,153.22.

Consumer education remains part of our core function as an organization and when we could not convey our message to consumers through face-to- face awareness campaigns because of COVID-19, we were supported by the media to take our message to consumers who may have found themselves in distress due to matters pertaining to their credit agreements and credit bureaux listings.   

The most common non-bank credit cases dealt with by the Credit Ombud ranged from disputes regarding consumers’ statements of account, fraud and prescription of debt. Many cases resulted in balances being written off, refunds being facilitated or assisting consumers to enter payment arrangements. Some of the most common disputes relating to credit information cases include insufficient or incomplete credit information at the credit bureaux, prescription, outdated credit information as well as fraud. The office resolved more than 60% of the disputes in consumers’ favour, signaling that consumers’ complaints were fully or partially upheld.

The Credit Ombud office is grateful to all our stakeholders. It is because of your support that we continue on this journey, and we find courage in knowing that the office is assisting with resolving disputes effectively and efficiently between consumers and the credit industry. To our members we say, thank you for trusting us with the task to assist your consumers. The doors of the Credit Ombud remain open because of the confidence you have in our capable and professional staff.

The Credit Ombud brings hope to consumers and credit providers

When we think of Spring, we think of new beginnings and hope. Spring is the phoenix of the 4 seasons. The season that brings back to life that which was dead or dormant. The flowers start to bloom again, the birds get chirpier, the sun gets brighter and warmer.

The Credit Ombud brings a glimmer of hope and new beginnings for consumers who may have exhausted all avenues trying to resolve their credit matters with credit providers. What the Credit Ombud does is to ensure that all disputes that come through our desks are dealt with fairly. When a consumer finds themselves at a stalemate with the credit provider, they may often feel powerless and think that there is no way that they could possibly get a fair resolution to their query. But not all hope is gone because the consumer may approach the Credit Ombud with their query so that it may be investigated fairly, independently, and honestly. We are an office that acts upon its values, which are:

FAIR

We will act in the best interest of all parties, taking both sides into consideration and considering the merits of each case carefully.

INDEPENDENT

We will not take sides and will remain impartial at all times. No individual or organization will be in a position to unduly influence us.

HONEST

We will openly deal with any issue brought before us, asking the relevant questions, and communicating clearly and transparently.

Take for instance Mr. Nkuna* who by the time he lodged his complaint with our office, was at his wit’s end as he had been trying to resolve his matter with the credit provider but was taken from pillar to post and received no assistance. He had an account with the credit provider for more than 15 years and in all those years this was the first time he encountered an issue with them. And despite his countless efforts to resolve the matter, it seemed as though his cries were falling on deaf ears until he came knocking on our doors asking for assistance. His complaint was that now that the account had been sold to another entity, there was a miscalculation on his account and the balance was incorrect. The Credit Ombud then did an extensive investigation where continuous communication took place with us and the credit provider and the consumer. We found that due to the account being in arrears, the terms of the agreement changed to an extended payment plan, which the consumer was made aware of. The credit provider further made available to us the statement of account which was inclusive of all transactions from the time prior to the account being bought over until after the migration happened. The consumer made further payments, paying off the arrears and the total balance, and a refund was due to the consumer. After the intervention of the Credit Ombud, both parties were happy with the outcome and although at first the consumer was threatening to close the account because of this dispute, he opted to continue with his relationship with the credit provider.

This is the reason why we encourage consumers to check their statement of accounts on a regular basis. There are certain things which the credit provider might miss or at times there may be a miscommunication between the two parties.

With the intervention of the Credit Ombud, it does not end with investigating only but we take each opportunity as a teachable moment, leaving the consumer with more knowledge of their rights and most importantly their responsibilities too. We had a case lodged by Ms Langeveldt* where her dispute was that 3 accounts that had prescribed were listed on her credit report. She had lodged her dispute with the credit bureaux and was not satisfied with the outcome from the credit bureaux and therefore referred her complaint to our office. She requested that these accounts be removed from her credit report. Let us not forget that according to the Prescription Act 68 of 1969, a debt is prescribed if during the past three years the consumer did not admit to owing on the debt, either verbally or in writing; they had not made payment towards the outstanding amount and summons was not issued and served on them. We contacted the credit provider and requested that they provide us with relevant information to prove whether the allegations were valid or not. Upon our investigation we found that the consumer had purchased goods with the credit provider on 3 separate occasions and furthermore agreed to combine the three instalments into one agreement and pay one instalment instead of three. The last payment for all three accounts was made within the three-year period, proving that the debts had not prescribed therefore the information could not be removed from the consumers credit report.

Consumers need to make a note of changes that happen with their accounts, where a credit agreement has been adjusted or changed, the consumer should request for all this information in writing and keep a record of it.

We also investigated a fraud case for a consumer. Mr Moloi* had been impersonated by a fraudster. This happened during a loan application which he made but did not go ahead with. He only realised this when the credit provider started calling him demanding payment on a loan that he had allegedly taken with them. Mr Moloi informed them that he had never signed any such agreement with the credit provider. He went to the SAPS to open a case of fraud and lodged his dispute with the credit provider, and he sent all documents which they requested from him for them to do their investigation. The documents requested included an affidavit and bank statements. Once his complaint was lodged with the credit provider, he did not receive any feedback. He was, however, sent a letter of demand and the phone calls demanding payment ensued. Mr Moloi approached our office and requested that we assist him to resolve this matter, which we did. We sent the complaint to the credit provider, requesting that they provide us relevant documentation that would prove whether the consumer entered into the credit agreement with them or not. Our office requested copies of the original contract and statements of account. After the credit provider completed their internal investigation, they came back to us confirming that the account was indeed opened fraudulently. This gave the consumer the relief for which he was looking because he had thought that he had been negatively impacted with adverse information reflecting on his credit report. The credit provider assured the consumer that the matter had been resolved and account was closed. The telephone calls demanding payment also ceased.

All the above consumers acted swiftly and where a case was not resolved in their favour, they were provided with credible evidence based on an investigation been done by our office. We were their hope in situations which they may have deemed hopeless as they were not getting the assistance which they required from the credit provider or credit bureau.

We are reminding consumers and urging them not to keep quiet when they find themselves in credit disputes. Knowing that there is an office that offers their services for free to consumers who may have non-bank credit agreement and credit bureau information disputes, is a comfort.

*The names used have been changed to protect the privacy of the consumers.

Going back to our roots – our heritage with money

It is not too late to teach an old dog new financial tricks!

It is true, most of our money habits have been learned from our elders – those who came before us and were the breadwinners at home. If you grew up in a home where drawing up a budget and planning for any expenditure was a norm, then you would have also been likely to have also inherited this habit and would also be able teach it to the next generation. Ideally, this would be in a perfect world. Many of us may have inherited a bad relationship with money/finances where we are in debt, living above our means, competing with the Molefe’s even when we didn’t have the same income as they did and being financially overburdened and depressed.

What are the money traditions that we learned from our elders?

  • Savings: were we taught about the importance of saving? Were we taught of the different financial facilities that are available to us to help us with our savings plan? Most of us grew up in homes where our parents would be in stokvels. We may have not quite understood the purpose of the stokvel, but we knew that at some point mom would have a lump sum of money and she would say that it’s her turn at the stokvel. This is another great method to save. Teach your children about the stokvel you are involved in and how it works.
  • Credit: were we ever taught why you enter into credit agreements? Credit is not free money. It is money you need to pay back and it must be paid back with interest. To enter into such an agreement needs that you sit down and PLAN for it so that you do not find yourself being listed as a non-payer at the credit bureaux. Before you sign on the dotted line, you should know what the terms and conditions of that agreement are. This requires time. Never be in too much of a hurry and too desperate that you do not consider what you are getting yourself into. Many of us still do not understand what the functions of the credit bureaux are or how your credit profile and credit score work. We do not even take advantage of the free credit profiles we can receive from the credit bureaux in every 12-month period.
  • Budget: did we ever see any of our parents sit and work on their monthly budget? We still do not want to budget because it is not a fun activity. But guess what, without your map, you will take 40 days and 40 nights to arrive at your destination that you should have arrived at in 4 days. Your budget helps you to plan, it helps you to recover.  

We clearly have a lot to still learn and for the next generation to not only be technologically savvy, but also financially savvy.

For some of us the only lesson we learned about money was that our parents did not have any money. Each time you would ask them for something that required them to take money out, they would respond with “We don’t have the money”. To compensate for all those disappointments that came with not having money, we now overspend and end up spending recklessly and land in even bigger financial problems. Sadly, this perpetuates the cycle of bad money habits.

Finance was never a topic that was discussed at family meetings. For some who were fortunate and grew up well off, your parents may have not taught you how to budget because they felt that they were providing therefore there was no need for you to worry about money because they ‘had it covered’. Money was never and is still not an easy dinner table topic. Whether with friends, family, or colleagues, we never want to discuss money, especially when we are in trouble financially. The hard truth about money is that we only care about it when we want to use it for that moment. We never want to plan or face the harsh reality of mistreating it.   

So how do we start creating new traditions when it comes to our finances that can be carried on to the next generation?

  1. Communication – we need to start talking about money at home. Teach children how to save and how to positively use credit in a practical and age-appropriate way.

Example: when giving your children an allowance, teach them that for every month that they save some or all their money, you will give them 10% of that money back at the end of the year. Similarly, if you borrow their money, you will then pay it back with an interest of 5%. That way you teach them about credit too. Teach them that if you do not pay back that money at the time you promised to pay it back then they can write it down in a file to track your payments that you are a late payer. They can use that information in your file to decide whether they will lend money to you again should you come back and borrow from them. Already you have taught your child about the relationship between a consumer and a credit provider and have added a lesson about the credit bureaux keeping consumers credit profiles.

2. Planning – whether it is planning for a holiday or for home renovations, you need to have a plan. As consumers we should have a vision for our money; where it is that we want our money to go or what do we want to achieve with our money? Have a timeframe of when you would like to achieve these plans. Your plan could be about how long you will take to pay off your debts. The power is in sticking to your plan. You take that same strategy and teach it to your children.

3. Dealing with bad spending habits – If you have certain triggers that push you to spend money that you did not plan on spending, then you need to be practical about dealing with those triggers. Write them down and find alternative ways to avoid spending.

4. Budget – this is a big one. We can plan and have the greatest visions, but if we do not do our monthly or even weekly budget, we will go off track as we will not be aware of our income vs expenditure.

5. Leave your children with assets and not debt – building wealth for our children should be the ultimate goal. We do not want to leave this world having debt and in the unfortunate event where we may have not had credit life insurance, we leave heap amounts of debt to our children, and they get left behind with these burdens. We grew up hating debt because we saw how our parents suffered because of it. Credit is a tool and therefore should be used with caution which is brought on by knowledge.

6. Your retirement, your responsibility – our children should not be our retirement plan. Speak to a financial advisor who will assist you to have secure plan for your retirement so that you may maintain your current lifestyle or have a better one.

These are the life skills we want our children to learn. Finances should not be a taboo subject. So, this Heritage month as we celebrate our beautiful different cultures and diversity that have made us into this wonderful, cultured country that we are, let us also not neglect how far we have come and how much further we can go when we create new traditions of being financially free.  

This Festive Season – Avoid getting over-indebted.

As we approach the festive season it is important to remind ourselves that credit is wonderful when used for its intended purpose. With a proper checklist prior to applying for credit, you will sure avoid getting over-indebted.

The National Credit Act (NCA) gives direction to credit providers when it comes to over-indebtedness and reckless lending. When a consumer applies for credit, there are guidelines which the credit provider should follow which secures them from lending money or providing credit recklessly to the consumer.

Over-indebtedness is when a consumer is over committed financially, and he/she is unable to take on more debt. To determine this the credit provider would have to do an evaluation on the consumers finances, taking into consideration already existing credit agreements and the income and expenditure of the consumer. They are also required to check past debt repayment behaviour, reflecting on the consumers credit profile, to determine whether the consumer can satisfy in a timely manner all the obligations under all the credit agreements to which the consumer is a party.

Over-indebtedness is rife in South Africa, and there are several contributing factors to the hike in the numbers of over-indebted consumers. One which we would like to tackle as the Credit Ombud would be to assist consumers in making informed and intent decisions before applying for credit – taking preventative measures. Getting stuck in a debt trap causes frustration that may lead to depression because you feel that debt has overpowered you and you no longer have any control. We want to teach the consumer to take that control back. A sure way for a consumer to avoid over-indebtedness is to do a self-evaluation of your current financial state.

So, what is it that one must consider prior to applying for credit to avoid being over-indebted? Here is a checklist for consumers to use before they go and apply for credit:

  1. Distinguish whether need or want? – Credit is a tool. A tool that is meant to assist in advancing in one’s life. Ideally, we would purchase everything in cash however with the big purchases such as cars and houses, we need the assistance of a credit provider. Therefore, before you even go and apply for credit, ask yourself whether you NEED to acquire the credit or is it a want. At times what we want can wait, so you can either save up for the item you want or lay-by it. If you need to draw up and list of pros and cons, then do so. But do not go and apply for credit if you have not put a plan in place on how you intend to pay it back.    
  2. Affordability – Credit providers are required to do an affordability assessment for every consumer who applies for credit. What the Credit Ombud advises is that the consumer does their own assessment at home before they approach the credit grantor. You will be required to do a realistic budget, one where you are honest with yourself about your spending habits. Your budget does not only entail the major monthly expenditures and commitments such as school fees, debts, groceries, transport, etc., but it should include your entertainment, your beauty treatments, and all other extras which we enjoy and spend money on. Even the month-end takeaways. This exercise needs for you to be honest with yourself. Get a 3-month bank statement and see how and where you spend your money, your bank statement can never lie to you. Becoming your own personal accountant will help you to account for every cent spent.   
  3. Interest and other added fees – Part of that affordability is knowing and understanding the interest and other added fees which is charged and make up the total cost of credit. a monthly installment is inclusive of the interest and other added fees, which the consumer is made aware of when applying for credit. Before a consumer puts their signature on the dotted line, the credit provider needs to have been provided with the total cost of credit and understand what the total monthly installment will be. Part of the purpose of the NCA is to promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market industry when applying for credit it is advisable that various credit providers are approached with the aim of obtaining a competitive interest rate and the best price possible. A consumer is well within his/her rights to compare these prices in reaching an informed decision.
  4. Cooling off periods – Before committing to a new credit agreement, consumers must know and understand fully what they are binding themselves to. Prior to the conclusion of a credit agreement, consumers must be given a pre-agreement statement and quotation. The statement is a document that details the terms and conditions of the credit agreement the creditor is offering. The quotation disclos­es all the costs of the credit, showing the principal debt, the repayment schedule, the interest rate, other credit costs and the total cost of the proposed credit agreement. If you agree to and sign these documents, these become the credit agreement. The National Credit Act requires that credit providers must disclose and explain the total cost of credit to consumers so that they understand what they are agreeing to. What is important to note is that consumers do not have to accept the offer in the pre-agreement and quotation agreement. Consumers have up to five business days to consider the offer and can decide not to accept the offer of credit. The quotation is valid for five business days, meaning that the consumer has some time to consider whether to enter into the proposed credit agreement once they understand the cost implications (and own affordability). At any time before the expiration of the five-day period, consumers may hold the credit provider to the terms and conditions as disclosed in the pre-agreement statement and quotation.
  5. Credit bureau profile – Again, we remind consumer to check their credit profile at the credit bureau before they apply for credit. When was the last time you checked your credit profile? The NCA does give provision to the consumer to get a free credit report from each credit bureau in a 12-month period. Something we seldom do is to check our credit profiles before we go and apply for credit. How does it help you to check your credit profile before applying for credit? Well, you do not want to be turned back by the credit provider due to you having a low credit score. And this may even be because of an outdated account which may be reflecting on your credit profile. So, if you check your credit profile before you go and apply for credit, you can dispute any incorrect or outdated information with the credit bureau where the information is reflecting, which may prevent a successful credit application. Once you have checked your credit profile and have updated all information that would have affected your chances of obtaining credit, then you will be closer to getting that credit.
  6. Credit life insurance – Let us remember that credit life insurance is there to protect the consumers credit obligations should there be an event beyond your control where you won’t be able to earn an income. You do not have to accept the in-house insurance offered by the credit provider. Shop around to find a service provider who will offer you the best benefit that will be suitable to you. Several consumers are not even aware that they have credit life insurance. They continue to pay monthly installments which are inclusive of the credit life insurance however when they come across a situation which requires them to get the assistance of the credit life insurance, like retrenchment, they do not submit claims because they aren’t aware that they have this benefit. Read the terms and conditions to that insurance and understand them for your own protection.

Lastly, what is also important is to know where to go when you need help. The Credit Ombud office provides FREE assistance and advice with all credit bureau and credit agreement related matters.

  • Overcharging of interest or fees
  • Prescription of debt
  • Reckless lending
  • Debt collection issues
  • Fraud
  • Emolument attachment orders/Garnishee orders
  • Unfairly or incorrectly listed at the credit bureau (judgments, defaults, etc.)

Prescribed debt

Oh yes honey, that debt is old. Get rid of it!

It’s Spring and we all know what that means. It’s out with the old and in with the new, and that includes getting rid of old debt.

Yes, just like that old dress or pair of shoes that may be laying in your cupboard without being used and you may be thinking of getting rid of them, so too, should you do, with old debt. Unfortunately, as much as we would like to just simply throw away debt we no longer ‘need’ or make use of like the old pair of shoes, there are conditions to ‘getting rid’ of old debt. According to the Prescription Act 68 of 1969, a debt is prescribed if during the past three years;

  • You did not admit to owing on the debt, either verbally or in writing;
  • You have not made payment towards the outstanding amount;
  • summons was not issued and served on you.

The running of prescription is interrupted if any of the above happens. You must be aware that the debt remains valid and you remain liable for payment. It would then be in your interests to discuss a suitable payment arrangement with the creditor.

In March 2015 new legislation in terms of prescription came into effect. It sets out that a debt under a credit agreement that has prescribed may no longer be collected on by the creditor or debt collector, nor may the debt be sold. Prior to 2015, it was the responsibility of the consumer/debtor to raise the defence of prescription when a creditor or debt collector collected on a debt.  If you did not raise the defence of prescription, you would be liable to pay the debt with the related costs and interest levied on the account.

Section 126B in the NCA states that:

‘‘Application of prescription on debt

126B. (1) (a) No person may sell a debt under a credit agreement to which this Act applies and that has been extinguished by prescription under the Prescription Act, 1969 (Act No. 68 of 1969).

(b) No person may continue the collection of, or re-activate a debt under a credit agreement to which this Act applies—

(i) which debt has been extinguished by prescription under the Prescription Act, 1969 (Act No. 68 of 1969); and

(ii) where the consumer raises the defence of prescription, or would reasonably have raised the defence of prescription had the consumer been aware of such a defence, in response to a demand, whether as part of legal proceedings or otherwise.’’.

One would then be left to wonder, but why such emphasis on the prescription? What does it mean to the consumer and how is this fair towards the creditor?

  1. The insertion of Section 126B has brought a halt to the persecutions and threats of being negatively listed at the credit bureaux which consumers have had to endure if payments were not made. A debt that has not been collected on for an uninterrupted period of 3 years would have accruing interest and collection fees, which the consumer was liable to pay, and which may further lead to a negative listing at a credit bureaux.
  2. The section has also assisted in giving the creditor the right to collect on an outstanding debt and improving on collection systems to ensure timeous collections of debt.

Generally, prescription is interrupted by acknowledgment, either in admitting to owing the debt or making a payment towards the debt, after which you will be held liable for further payment.

It is imperative to understand that not all debts prescribe after the 3-year period. In terms of chapter 3 of the Prescription Act, certain categories of debt are set out with specific timeframes of prescription, which are:

  • mortgage bond and a judgment – thirty years;
  • cheques – six years;
  • other types of debts such as your credit card, personal loan, cellphone contract and gym contracts prescribe after three years.

Just as with Spring-cleaning, the Credit Ombud advises consumers to take advantage of cleaning out any adverse information that may appear inaccurately or incorrectly on your credit profile.  You are entitled to a FREE credit report from the credit bureaux once a year. Start the Spring-clean process by contacting the credit bureaux and requesting for your credit profile. Should you believe that an account has prescribed, challenge this by logging a dispute with the relevant credit bureau. Ensure that you are provided with a dispute reference number and allow the bureau to investigate your dispute within 20 working days. Should the credit bureau not respond to you after the 20 working days or should you not be happy with their outcome, you may then contact the Credit Ombud for further assistance. 

The Credit Ombud also recommend that consumers acquire new habits, where you’ll align yourself with the new normal of being economical and creating space for new and wise financial decisions. Just as you get rid of those old shoes, clothes and accessories and make space for the new, remember that your finances deserve your attention as well.     

Should you wish to log a dispute, you may do so by calling us on 0861 662 837; sending a SMS to 44786 (free of charge); emailing us at ombud@creditombud.org.za, or via our website complaint form which can be accessed at  www.creditombud.org.za Our service is FREE.

Advertisement for position of Credit Ombudsman

The Credit Ombud (situated in Randburg, Gauteng) is a non-statutory ombud scheme, which resolves disputes between the credit industry and consumers relating to credit information and non-bank credit agreements. The office also educates the public in matters pertaining to credit and the credit information industry.
To discharge its mandate, the Credit Ombud requires the services of an individual who also has extensive experience in the financial services and credit industry. The incumbent will be responsible inter alia for:
• Strategically positioning the office;
• Assessing and overseeing the compliance, operations, processes, policies, and procedures of the Credit Ombud against current and pending legislative and regulatory requirements with a view of recommending areas for optimization to the Council;
• Consulting and engaging with relevant stakeholders including credit providers, credit bureaux, regulators and industry bodies and consumer representatives;
• Providing sustained and effective leadership that promotes a culture that reflects the organisation’s values;
• Contributing high level strategies for the complaints-handling process in terms of the NCA and FSOS Acts and amendments necessitated by regulatory changes such as the FSRA;
• Drafting rulings where the alternative resolution processes failed to resolve disputes
This position requires a professional with the following attributes:

  1. Academic Background
    • A relevant tertiary degree is required
    • LLB with admission as an attorney/advocate, will be an advantage;
    • Knowledge of the NCA, its regulations, the FSOS, POPIA and FSRA Acts.
  2. Knowledge/Experience Required
    • At least 5 years working experience in a financial services regulatory/compliance environment;
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    • Independent thinking, a fit and proper person, demonstrating high levels of competency, capability, and financial soundness;
    • Sound leadership qualities and the ability to effectively contribute to a service-driven organization;
    • Proven ability as a team leader with a commitment to create support and sustain an environment that enables the office to achieve results.
    The Credit Ombud is committed to furthering employment equity in its appointment practices. Interested candidates may forward CV’s to Avitha Nofal avithan@creditombud.org.za by 10 November 2020. Applicants who have not heard from us by 17 November 2020 should consider their applications unsuccessful. The remuneration package is negotiable; however, candidates must indicate their expected remuneration (cost to company) on their CV’s.

Financial and mental wellbeing

The month of October has been declared Mental Health Awareness Month with the objective of not only educating the public about mental health but also to reduce the stigma and discrimination that people with mental illness are often subjected to.

There are many contributing factors that affect one’s mental health. Some of us do not see it coming and those that do acknowledge the condition often do not treat this adequately.  The inevitable consequences are that it may impede your capability to efficiently function at work, your daily life at home and with your social life. Should you believe that you may have a mental health condition, it would be prudent that you engage with a medical professional.

There is no question that your mental health plays havoc with your financial acumen. The Credit Ombud have received calls from consumers who were in over their head with debt to the point that some have even threatened to take their own lives. It’s a very sad reality but financial burdens can lead to depression and anxiety. With 2020 being one of the toughest years we have ever faced, many consumers are under distress when it comes to finances. The lockdown saw many sectors having to close their doors in adherence to the lockdown regulations. Consumers who were/are affected had to make arrangements with their creditors. Unfortunately, due to the day-to-day financial strains, some consumers had to revert to unconventional ways to secure the money that they needed to cover some of their debts.

Talking about financial issues, although part of our daily lives, still appear to be a taboo topic which conjures up feelings of guilt and helplessness.  We are private creatures by nature and may not want to divulge personal financial concerns with our families, friends and our work colleagues. We want to portray the image of success and talking about how we handle our finances will distort this perfectionism. The irony is that this perpetuates the cycle of debt and we are unable to get out of the depression and debt trap.  Loss of employment or a salary cut; personal issues in the home environment, the attraction of sensational marketing and the appeal of mesmerizing sales contribute to debt.  Consumers must remain pro-active in acknowledging to themselves that they do have debt.  Ignoring your debt obligations is a recipe for disaster as the debt does not disappear and will certainly accrue additional interest and costs.  You must be principled to take control of your finances by recognizing your income and your spending patterns.  If you are unable to explain your financial challenges with someone you trust, approach a financial expert to let you have independent advises.  While it is understandable that approaching a financial expert may not always be plausible, there are several easy to remember key points that you may consider.

  1. Pay your accounts on time every month;
  2. Pay the full instalment owed each month;
  3. If you are unable to make a payment due to unforeseen circumstances, talk to the credit provider to make alternative arrangements to pay back what you owe;
  4. Never buy on credit without knowing if you can afford the repayments;
  5. Try to keep credit repayments to a nominal percentage of your income;
  6. Stay informed about your personal credit information. You may obtain your FREE credit report, every twelve months from the credit bureaux;

The Credit Ombud also urge employers to put together wellness programs to assist employees with their financial wellbeing. As an educator to the public in matters pertaining to the credit industry, we are renowned for providing helpful financial/credit tools that will assist consumers to better understand and handle their own personal finances. Credit is a tool which is meant to be used to mend, not to pull apart one’s life. Lets’ learn to use it for what it’s intended for.

The Credit Ombud offers the following additional advice to consumers who are financially stressed:

  1. Budget and Plan

Prepare a monthly budget, where you can identify your income and expenses. The budget is a plan and it is important to stick to this plan to bring you to financial wellness. Remember to include an item for savings in the budget as well as a year-end treat for yourself;

  • Pay off and close some accounts, if you can.

Identify if there may be some accounts that you could pay off and then close those accounts. Generally, it is best to start paying off the smallest accounts.  As you find the accounts are closed, the progress will make you feel better;

  • Do not hide

When we are stressed due to our financial situation, the tendency is to avoid the calls or SMS’s from our credit providers and to hide. It is better to speak with our credit providers and make suitable plans to deal with our debts. It remains to your advantage to consistently update your address and contact information with credit providers.  In the event that you cannot be located because you have moved house or changed your telephone details, the credit provider would appoint tracers to track you.  This leads to additional collection costs and interest charges;

  • Do not ignore a letter of demand for payment or a summons to appear at court due to non-payment.  Should you ignore a summons and judgment is taken against you, the credit provider would have thirty years to collect on the outstanding debt.
  • Get help

If your situation remains desperate you can seek help from a debt counsellor. Please check that the debt counsellor is registered with the National Credit Regulator. Debt counselling is a legal measure to provide relief to consumers who are over-indebted and are struggling to meet all their financial commitments. Assistance from a debt counsellor include, among others, negotiations with credit providers to restructure your debt and reduce the monthly payments to credit providers.

These are important steps to take to nurse consumers back to financial wellness and a stress-free life.

Black Friday 2020

The ‘feel good’ psychology of buying is evidently from the release of dopamine in the human body.  With us consistently searching for enjoyable feelings, sales have been targeted at delving into the psyche of making us feel satisfied and fulfilled by buying things.  ‘Black Friday’ is no exception to making us buy. 

Advertising goes further in making us believe that purchasing items during Black Friday and Cyber Monday is a sure way of ensuring that we take full advantage of alluring, not-to-be repeated bargains.  We are intuitively predisposed to the fear of missing out and the belief that the item is of a higher value than what it was worth therefore almost giving us the go-ahead to thoughtlessly purchase items not needed. 

With the invent and subsequent continuance of the frenzy of purchasing on Black Friday internationally and in South Africa, there are certainly incredible purchase-offerings from which consumers may benefit.  The Credit Ombud is not vilifying the value that Black Friday may hold for many consumers nor the opportunity that it presents to retailers to market their products.  Black Friday should be approached strategically, giving you the chance to capitalize from your dedicated savings plan to purchase the item.  If you did not budget for the item and the item was a ‘want’ as opposed to a need, you must stay disciplined to walk away from the sale.  Purchasing the item on credit will inevitably raise the cost of the item and is not a ‘win’ situation.  Set yourself a target in that you pay case for the item.

We would advise consumers who have either not planned or budgeted for items they need, to resist the impulse to purchase during Black Friday and defer the purchase to a later time.  If Black Friday does not work for you, remember that Christmas is on the horizon and sales will again feature prominently. 

The Credit Ombud asks that consumers be alert to Black Friday excitement and to remain financially savvy by taking account the following key tips; 

  1. Plan and budget for the items you wish to purchase and if the item is not on the budget, it should not appear in your shopping cart and your shopping bag. We suggest that you compile a list of your monthly income and expenses and subtract your expenses (including debt obligations) from your income.  Use that as an indicator to budget for your Black Friday purchases.
  2. Be vigilant when making purchases online.  With the enhanced ease to shop online, there comes a corresponding risk relating to fraud activity. Protect yourself from buying from unknown sources and ensure that a secure payment method is used.
  3. Check your bank statements for any unusual debits.
  4. Avoid purchasing on credit and if you must, then ensure that you satisfactorily understand the total cost of credit. You do not pay the same price for the item if it is paid in cash and if you purchase on credit. Make sure you can afford the items before you purchase them. Always enter into credit agreements with registered credit providers.
  5. Shop around for the item you wish to purchase by comparing prices between service and credit providers to source the best deals.
  6. Your credit score is your credit reputation. It is one of the useful information that credit providers use to decide whether to extend credit to you or not. One of the important factors when calculating a credit score is your monthly payment behavior.  Past credit behavior is an indicator of future payment behavior. Your credit score offers some telling insights into the state of your finances. Keep up to date with your credit profile and watch for any warning signs that might lead to a negative credit assessment by lenders.