Voluntary codes of conduct for the credit industry should stay, the Credit Ombud said on Thursday.
Last month, the National Credit Regulator (NCR) proposed it should withdraw approval of various voluntary codes of conduct.
“We believe this will have not only extensive adverse effects on the credit industry, but also on consumers,” said Credit Ombud Manie van Schalkwyk in a statement.
The NCR said it was proposing the withdrawal of approval of the codes, including an industry code to combat over-indebtedness.
It would also withdraw recognition of various associations, including the National Debt Mediation Association (NDMA), Debt Counsellors Association of South Africa (DCASA), Payment Distribution Association of South Africa (PDASA) and the Credit Ombud.
These codes had been established on the recommendation of a 2009 debt review task team, which had analysed capacity constraints, weaknesses, inadequate compliance, and the failure of the NCA as contributing to debt counselling failure.
Within two years, the codes had solved many of the problems caused by inadequate processes within the National Credit Act.
“By scrapping the codes, the market will be unregulated to the disadvantage of consumers,” he said.
The NCR could recommend amendments to the codes if they needed improvement.
It could also approve a separate code for debt counsellors who did not wish to subscribe to the current code, provided it was in line with legislation. - Sapa