Guiding consumers since 2009

NCT takes debt counsellor to task

By Staff Writer
Following a lengthy investigation by the National Credit Regulator (NCR) the National Consumer Tribunal (NCT) cancelled the registration of Johan Walter Van Zyl, a debt counsellor from Durban.
 
The NCR’s investigation into Van Zyl’s debt counselling activities revealed contraventions of the National Credit Act (NCA), the regulations and Van Zyl’s conditions of registration.
 
According to the NCR, one of the main issues of non-compliance addressed in the compliance notice (issued to Van Zyl) was the fact that he was receiving monies from his clients and distributing such monies to the credit providers of his clients.
 
In doing this he was acting as a Payment Distribution Agent (PDA), while not being approved as such by the NCR. Van Zyl challenged this compliance notice before the NCT, which resulted in a consent order being granted by the NCT.
 
In terms of the consent order, Van Zyl had to, inter alia, apply to the NCR to be approved as a PDA and pay a fine to the NCR of R30 000 of which R15000 was payable immediately.

The remaining R15, 000 had to be paid if his application to be approved as a PDA was unsuccessful.
Van Zyl paid the R15 000 and also applied to be approved as a PDA. 
 
According to advocate Gideon Mashamaite, manager of investigations and enforcement at the NCR, the investigation revealed certain short comings which Van Zyl promised to rectify within three months.

Six months later, the NCR conducted a follow-up investigation which revealed that the majority of the undertakings given by him had not been complied with.
 
Van Zyl was then formally notified that his application, to be approved as a PDA, had been unsuccessful and that he could no longer accept monies from his clients and distributors such to credit providers. He was also notified that the outstanding amount balance of R15 000 was due. 
 
But despite this notification, he continued to act as a PDA and failed to pay the R15 000. The NCR then lodged an application to the NCT to cancel the registration of Van Zyl as a debt counsellor, which he opposed.
 
In its judgment, the NCT found Van Zyl’s conduct towards the NCA, his conditions of registration and the NCR to be an aggravating factor. They also found that Van Zyl’s blatant contempt of an Order of the Tribunal to be a further aggravating factor. 
 
“The actions of debt counsellors who do not fully comply with their conditions of registration and receive monies directly from their clients will not be tolerated and the necessary enforcement action will be taken.
 
In terms of the NCA, failure to comply with an order of the NCT is a criminal offence and a person convicted of such an offence will be liable to a fine or imprisonment not exceeding 10 years or to both such fine and imprisonment,” said Mashamaite.  
 
NCT’s hard stance on PDA’s
 
Paul Slot, president of the Debt Councellors Association of South Africa, said the NCT is hitting unregistered PDA’s hard because so many people are abusing the fact that they have access to other people’s money.
 
“Licensed PDA’s are audited four times a year by the NCR alone and generally they are audited eight times a year. This is all to safeguard the consumer and make sure their money is not stolen but paid to the necessary credit providers,” said Slot.
 
According to Slot, as a debt counsellor, it is in fact a transgression to act as a PDA as well. And with PDA’s paying R320 million a month to credit providers, it comes as no surprise that their credibility is scrutinised so closely.
 
To ensure that you are working with an accredited PDA, check on the NCR’s website or confirm it with your credit provider. The debit order used to make payments should also have a stamp that shows it is authorized by the NCR.

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