The National Debt Mediation Association (NDMA) saw a 60% increase in requests for mediation during the fourth quarter of 2012, from 538 cases in the third quarter to 1 352 cases in the last quarter.
The increase was due to the introduction of service improvements that allowed debt counsellors to submit bulk complaints.
“The increases demonstrate the relevance of the NDMA as an effective and trusted dispute resolution mechanism that is effective and accessible to both consumers and debt counsellors,” says NDMA CEO, Magauta Mphahlele.
Most of the bulk complaints related to allegations of slow or lack of response to debt review applications and the request for documents like certificates of balance. Unfair terminations from debt review, non-adherence to court orders and legal action taken while under debt review were also prominent.
The outcome of an investigation into more than 700 bulk complaints relating to alleged non-compliance with the debt review process will be released at the end of February 2013.
The largest source of cases dealt with remains the banking industry at 83%, with the remaining 17% shared by micro lending, motor finance as well as clothing and furniture retail. The banking industry’s share of the credit market is more than 80% and it is therefore understandable that the bulk of complaints would emanate from this sector.
“The picture changes when financial hardship mediation is considered,” explains Mphahlele. “While banking still played a dominant role at 56%, the role of furniture retail and motor finance became larger, with the two contributing 16% and 12% respectively.
“Twelve percent related to the “other” category, which includes medical doctors, cell phone companies and municipalities. These categories give an indication of the type of accounts consumers are struggling to repay.”
Financial hardship mediation is where consumers are experiencing repayments difficulties with some of their accounts due to retrenchment, divorce, maternity leave and have subsequently been issued with section 129 notices or their cases are already advanced in terms of the legal debt enforcement process.
Thousands of consumers are not aware of their rights and obligations when it comes to the debt enforcement process. The NDMA, through its helpline is able to provide consumers with advice on the options available to them and where their rights have been transgressed, mediate a solution or refer them to appropriate assistance.
Since January 2012 the NDMA helpline received 22 355 calls from consumers and handled 3324 enquiries. The NDMA has also recently introduced a “PLEASE HELP” SMS line where consumers can request the NDMA to call them. This will ensure that low income consumers are accommodated.
The NDMA urges consumers to seek assistance and advice when they feel their credit rights have been compromised or if they are not sure about the options available to them when they are experiencing financial difficulties.