Credit Ombud annual results show a 14% increase in credit provider disputes

The 2012 annual results for the office of the Credit Ombud point to an  increased demand for assistance from consumers
when it comes to non-bank credit transactions, which include credit agreements
with furniture and retail credit providers, loans from micro lenders and credit
providers other than banks.  Disputes
against these credit providers mostly related to issues such as garnishee order
disputes, service disputes and statement of account disputes.

The office has seen a significant
increase in non-bank credit disputes, opening 2, 217 disputes during 2012, an
increase of 60% as compared to the previous year. ‘The increase could be due to
a combination of increased awareness of our services as well as an increase in
consumers who wish to dispute their accounts with their credit providers,’
comments the Credit Ombud, Manie van Schalkwyk.

Consumers obtain free assistance in three areas at the office of the Credit Ombud, these include
credit information disputes, non-bank credit disputes, as well as debt counselling

‘We are pleased to report that we experienced an increased  demand
for our services in 2012, opening a total of 5, 506 disputes across all
departments, an increase of 14% as compared to the previous year and we finalised
5, 140 disputes with 53% of these disputes resolved in favour of the consumer,’
says van Schalkwyk.

‘It cost us R 1, 930 to finalise a dispute with disputes taking an average of 42,6 days to finalise. We
are proud to report that we managed to recover a total of R1, 9 million for
complainants in 2012. This amount represents refunds of overpayments, accounts
being written off and adjustments of accounts in consumers’ favour. In many
cases these refunds have made a real difference to consumer’s lives,’ adds van

There was also a notable increase in the number of debt counselling disputes closed during the period with a
total of 501 disputes closed in 2012 compared to the 414 disputes closed in the
same period for the previous year.

‘When it comes to debt counselling matters, we found that the biggest contributing factor that led to complaints
in debt counselling matters, was the debt counsellor’s failure to communicate
with consumers,’ notes van Schalkwyk.
‘Another concerning factor was that of debt counsellors absconding or
closing businesses, leaving the consumer with nowhere to turn whilst being  faced with the possibility of their houses or
cars being repossessed and auctioned as a result of credit providers not receiving their payments,’ he continues.

In response to recent developments within the credit industry, the office of the Credit Ombud has
come to an agreement with the National Credit Regulator (NCR) that all new debt
counselling matters will be referred to the NCR.

In the area of credit information disputes, the office experienced a 6% decrease in disputes opened,
with 2, 789 disputes being opened in 2012.

‘We have, however, seen a significant increase in the number and complexity of fraud cases in the credit information
department. The figure for fraud complaints almost doubled for 2012. This is
cause for concern as identity fraud appears to be rampant as more consumers make
use of online and cell phone transactions,’ cautions van Schalkwyk.

No rulings were made in 2012, with the Credit Ombud facilitating all disputes to have an agreed outcome
between all parties. 65% of disputes were resolved through intervention, while
35% of cases were resolved through a facilitation process.

The National Credit Regulator’s (NCR) latest statistics show that the number of accounts increased
to 70,73 million, with 18,31 million of these accounts being impaired.

‘The NCR’s recently released figures show the number of impaired accounts having increased by 1,37
million as compared to the same period last year. This is an indication that consumer’s
credit wellbeing is on a downward spiral. More cash strapped South African’s may
find it increasingly difficult in the next year to access credit due to a lack
of affordability on the one hand and impaired credit records on the other,’
comments van Schalkwyk.

The office of the Credit Ombud has its work cut out with the ever increasing over-indebtedness of consumer’s
in this country. ‘Our office continues to play an increasingly important and
integral role in not only assisting consumers with their disputes, but educating
them on financial and credit matters in general,’ says van Schalkwyk.

The Credit Ombud’s office is faced with a mammoth task to ensure that consumers are informed of the free
services offered by the Credit Ombud’s office, and also to educate consumers on
credit and financial related matters in order to facilitate rehabilitation. ‘We
want to play our role in  educating the
public on credit matters and this is a vital part of the work we do in order to
help improve consumers’ knowledge and understanding and to maintain a healthy
credit industry,’ adds van Schalkwyk.

‘There are still thousands of consumers who have disputes with their credit providers over accounts and
who need our assistance to have the disputes resolved, so that the credit
relationship can continue. At the same time, just as many consumers have
disputes about the information listed on the credit bureaus and they need
someone to assist them to resolve these disputes,’ added van Schalkwyk.