The National Credit Act: Debt counselling may prove to be a risky enterprise

Abstract

Debt counselling, and debt counsellors, have been introduced in the National Credit Act. The Act assists consumers in controlling debt, but the viability for an individual to register as a debt counsellor is questioned. The requirements (and exclusions) to qualify as debt counsellors, their necessity in identifying reckless lending transactions and their functions in the processes of debt review and debt rearrangement are discussed. Certain categories of persons who may normally incorporate debt counselling as part of their practices and who do not qualify in terms of the Act, is indicated. Debt counsellors’ responsibilities and accompanying risks, at a prescribed fee tariff, are indicated when the debt review processes, from applications by consumers who are not over-indebted, voluntary and involuntary debt rearrangement, until the issuing of clearance certificates, are assessed. An inevitable deduction is that practice as a debt counsellor may be impossible when the financial layout required is assessed. Individuals who, due to their training and experience in the positions they hold, would have been well placed to practice as debt counsellors is shown to be unable to practice as such in terms of the Act. These individuals will be compelled to establish private enterprises to enable them to practise as debt counsellors, which will be impossible at the current prescribed fee tariff.