The National Debt Mediation Association (NDMA) is turning itself into a non-profit and independent consumer focused services agency that will support indebted individuals to rehabilitate their credit status and reclaim their financial wellbeing.
The organisation was initially set up by the credit industry to provide debt mediation services to consumers. It received much criticism for this structure and questions about its independence. But now the NDMA wants to stand alone and provide a whole range of services to the nine million over indebted South Africans, such as debt counselling and debt advice at a minimal cost or for free for low income earners.
“We felt it was essential that we are independent and that we would help consumers. We will be publishing the costs of our services in September 2013 but, until then, they are free,” says Magauta Mphahlele, CEO of the NDMA. “Our national helpline will help consumers on any issue related to credit, such as disputes regarding statements and interest rate queries and it’s a free service.”
In order to become truly independent, the agency will also become self-funding through donors and will generate income from services offered on a cost recovery basis. Its board will have new appointees too. “We will have an independent chairperson and our board will consist of members that are outside of the credit industry. We will have a minimum of five people on the board as described by the Act,” added Mphahlele.
Providing support, advice and education
The NDMA will offer services including individual or group financial hardship solutions; legal remedies; court mediation and consulting. Where a consumer requires and is suited for debt counselling, the NDMA will offer this service through a newly established unit within the NDMA, run by registered debt counsellors. These services will be charged according to prescribed guidelines where they exist*. “The NDMA will also strive to find ways to service low income consumers either at no charge or at a minimal and affordable cost and through lobbying for funding to be provided by government or industry” says Mphahlele.
“Through education, rehabilitation and other supportive processes, we will help consumers to avoid falling into, and enable them to get out of, the trap of recurring over-indebtedness,” says Mphahlele. She adds that the NDMA’s experience will enable it to deliver the highest standards of service, innovative, and sustainable solutions for the market, backed up by sound business and ethical principles, within a non-profit model.
The NDMA will inform and educate consumers through the National Responsible Credit Helpline. “After handling more than 40 000 calls in the past two years, the NDMA has built up a wealth of knowledge and experience in handling consumer enquiries and empowering consumers with information and self-help tools on any matter related to credit, budgeting, rights and responsibilities, how to handle disputes as well as referrals to appropriate assistance where the NDMA has no jurisdiction,” says Mphahlele.
If consumers can’t afford making a call, requests for assistance can also be made through an SMS “Please Help” channel (see below).
Changing consumer behavior
In respect of consumer empowerment and behavior change, the NDMA will be partnering with the award winning NGO, Heartlines on Nothing for Mahala, a movie on values and money, which will be launched on 4th October 2013 in cinemas around South Africa. Through this campaign, the organisations hope to reach 12 million people.
The NDMA is also collaborating with Ochre Media (the producers of Scandal) to air the SABC1 reality show, “InDebt”. It is a 13 part series and will be on television screens from the second week of October 2013. The programme is expected to reach more than six million consumers.
“The key components of the programme is to empower consumers to resolve their over indebtedness by completing specific tasks under the guidance of the Debt Doctor” says Mphahlele. “As they walk through this journey their story helps to educate viewers on how to take responsibility for indebtedness, where to go for assistance and explores various options to resolve their situation”.
*Do you know how much your debt counsellor may charge?
According to the National Credit Regulator, the debt counsellor may receive the following amounts in respect of consumers who have applied for debt counselling:
1. An application fee, limited to the amount prescribed in terms of Schedule 2 (2) of the Act, recoverable directly from the consumer upon receiving an application for debt review;
2. A rejection fee of R300.00 (excluding VAT) in respect of consumers whose applications have been rejected in terms of section 86(7)(a);
3. A restructuring fee of the lesser of the first instalment of the debt re-arrangement plan or a maximum of R6000.00 (excluding VAT), in respect of a consumer whose applications have been accepted in terms of 86(7) (b) or 86(7) (c). (Should a joint application be required, the fee can be increased to a maximum of R6000.00 (excluding VAT).
To call the NDMA’s helpline call 086 111 6362 or SMS its call-back line on 44238. SMSes cost R1.50.