Non-bank Credit Department

Our department has seen yet another increase in the number of disputes in the last quarter, having opened a total of 948 disputes in the previous quarter, resulting in an increase of about 25% when compared to the same period in 2013. We have closed a total of 919 disputes, which represents a 6.24% increase when compared to the same quarter in the previous year.

The attorneys in this department are kept busy with the task of ensuring that the provisions of the NCA are being complied with, especially when it comes to calculations of interest and statements of account. We have thus far saved consumers a total of R1.38 million, an increase of 5% when compared to the same period in 2013.

Three issues stand out in the past quarter. The first trend that we have noticed is an increase in the number of credit insurance complaints, especially relating to retrenchment cover. Our economy has been under serious pressure for quite some time now and even more so over the past few months. The number of consumers who have lost their jobs has increased and as a result, the claims in respect of retrenchment cover have also been on the rise.

From the complaints we received it appears that the requirements or even the benefits of retrenchment cover are not always adequately explained to consumers when they enter into credit agreements. Many consumers do not realise that, for example, non-payment of instalments will prejudice their rights to claim against the insurance cover and in some instances this gives rise to disputes. In other cases, we find that consumers do not know that they should obtain the correct proof of retrenchment in order to process their claims and many a time they wait too long to submit their claims and as a result lose out on their benefits. In order to avoid such disputes, we would recommend that credit providers give more attention to educating their sales staff, as well as consumers, about the benefits and requirements attached to retrenchment cover.

The second issue is still the ever increasing number of complaints from consumers about “unlawful” emoluments attachment orders. We are often faced with complaints from consumers that they only found out about the judgment and court order after they saw the deduction from their salary! Many consumers claim that they did not sign any documents giving consent to the judgment and emolument attachment order and in fact, they also sometimes allege that they had not been contacted whatsoever in relation to payment of the debt. Through our investigations, we have found that in a number of cases, the collection attorneys blame the tracers, who in turn blame the consumers and there is no clear proof that the consumer did in fact have the conversation with the tracers and consented to the judgment etc.

It is vital that credit providers always exercise due diligence when appointing collection agents and attornies in order to ensure that those acting on their behalf behave in a lawful and ethical manner and that will hopefully eradicate these type of complaints over time.

The third issue which has steadily been on the rise centres around the retention of documents. In terms of regulation 56 of the NCA, credit providers are obliged to keep copies of all applications for credit, as well as all credit agreements and accounts for a period of 3 years after the expiry of the contract. We have encountered a number of cases where the credit providers simply claim that documents “have been lost or mislaid”, when we request such documents in order to investigate a complaint. The fact is that the legal requirements are not complied with and this causes serious prejudice to the consumer. We are concerned that this is a trend and we will engage with our members on this matter.