Abstract
The South African National Credit Regulator is responsible for the regulation of credit industry, registration and training of debt counsellors, enforcement and monitoring compliance of the provisions of the National Credit Act. The aim of this paper is therefore to analyse the perceptions of the National Credit Regulator on the usefulness of debt counselling process in South Africa. A qualitative approach, which was exploratory in nature, was adopted for this study. Ten employees from the National Credit Regulator’s office were interviewed. There was no evidence that debt counsellors were managing the debt counselling service effectively. It was also observed that the debt counsellors received insufficient support from the National Credit Regulator. The paper recommends that the National Credit Regulator should adequately support the debt counsellors so that they can effectively manage debt counselling service and ultimately assist the overindebted consumers. Debt counsellors training curriculum should also be outcomes- based approach with exposure to business management.
Highlights
The expansion of consumer credit in South Africa started to be noticeable since 1968 and has been going on over the past years
This paper aims to analyse the perceptions of the National Credit Regulator on the usefulness of debt counselling process in South Africa
The findings pointed out that debt counsellors were not adequately trained; the National Credit Regulator (NCR) does not act instantly to complaints raised by debt counsellors; the regulation, monitoring and support from the NCR is insufficient, and as such there is no proper monitoring on the debt counsellors as mandated by the National Credit Act (NCA)
Summary
The expansion of consumer credit in South Africa started to be noticeable since 1968 and has been going on over the past years. According to Prinsloo (2002), from 1985, the importance of consumer credit changed substantially as several factors such as the high level of nominal interest rates, the depreciation in the value of the rand and adverse socio-political developments impacted negatively on consumer confidence and caused a slowdown in the expansion of consumer credit. A high percentage of personal income is used to service micro-lending debt, leaving very little of borrowers’ personal income to pay for other household expenses (Republic of South Africa, 2006). In addressing this problem, the government introduced the National Credit Act (NCA) No 34 of 2005. The main objective of the NCA is to promote a fair and non-discriminatory marketplace for access to consumer credit and to provide for the general regulation of the consumer credit (Republic of South Africa, 2006)
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