Unscrupulous, cold-calling debt counsellors are once again in the spotlight, with the National Credit Regulator’s (NCR) announcement that it had cancelled the registration of a DC for placing consumers under debt review without their consent.
The DC, Asia Lamara and her associated firms MSA Consultants and Consumer Finance Solutions were fined R1million by the National Consumer Tribunal (NCT).
Lamara is said to be planning to appeal against the ruling.
In a statement issued last week, the regulator said it became aware that Lamara, a registered debt counsellor had provided debt counselling services through her MSA consultants and/or Consumer Finance Services in Cape Town and that she was conducting business in a manner contrary to the National Credit Act (NCA).
The NCR said it had received thousands of complaints about her “services”, including that she was scamming consumers into debt review and then charging some to get released from the process.
Lamara, who describes herself as “a highly successful debt counsellor who has placed 90000 consumers under debt review”, was found guilty of 14 contraventions of the NCA.
But her clients painted a different picture: complaining to the regulator about a lack of professionalism and confusion.
Instead, they had been dealing with unqualified call centre agents from MSA, who were working off scripts and created the impression that they were doing the work of a DC.
By the time indebted consumers were passed to Consumer Finance Solutions, they had already been “pre-approved” for debt counselling - and told how much they would be paying off to clear their debt. All of this happened before the registered DC had even had sight of their personal and credit information.
Consumers who spoke to these agents and decided against debt review were summarily added to the NCR database of consumers who had applied for debt review.
Other problems related to incompetent administration: papers were not filed correctly, data not captured, so consumers were still hounded by credit providers. Some lost their assets.
On Hello Peter, there are hundreds of complaints about MSA and Consumer Finance Services, with victims calling Lamara and her companies “crooks” and “scammers”.
Many of the complaints received by the regulator were that Lamara had placed consumers under debt review without their permission.
The regulator launched an investigation into her conduct and found that she was acting in a manner, which constituted serious contravention of the NCA.
The NCR then applied to the tribunal for Lamara’s deregistration. In December, the tribunal handed down its ruling confirming that Lamara had contravened several sections of the NCA, the regulations and her Conditions of Registration.
Lamara was ordered by the NCT to immediately stop engaging in any activity that requires registration as a debt counsellor, surrender her consumer files to the NCR after conducting an audit and to pay an administrative fine of R1m.
The audit hoped to establish if Lamara’s consumer files contain completed and signed statutory debt review application forms confirming that consumers have indeed applied and consented to be placed under debt review; if Lamara listed consumers under debt review at the credit bureaus without referring their matters to the magistrate’s court or the National Consumer Tribunal for a debt restructuring order or consent order within 60 days of the dates that the consumers applied for debt review; and if Lamara’s debt counselling fees complied with the debt counselling fee guidelines.
In its ruling, the tribunal confirmed that the NCA requires the personal involvement of a qualified and registered debt counsellor, who renders debt counselling services to consumers. It said debt counsellors cannot circumvent their lawful obligations by appointing unregistered persons to provide debt counselling services, nor are debt counsellors entitled to rely on a computer system to render debt counselling services, including making a determination that consumers are over-indebted.
The NCT also confirmed that the prescribed manner in applying to a debt counsellor was not by way of an oral mandate made to an agent of a debt counsellor. This practice is believed to be rife in the industry.
Another important aspect of the order is that Lamara had failed to submit debt restructuring proposals to a magistrate’s court or consent orders to the tribunal.
It found Lamara had failed to perform her duties in line with the NCA and that she had brought the industry - and the regulator - into disrepute.
Rife abuse
Last year, the case of another consumer summarily placed onto debt review drew widespread condemnation. The complainant, Johannes Miti had also been contacted by a cold-calling agency in Cape Town who ended up botching his debt review - badly.
The African Debt Advisors agent had contacted him, suggesting he consider debt review, although Miti didn’t believe he required it at the time. In the end, he was placed under debt review without his knowledge by an affiliated company, My Debt Assistant. He lost his car in the process and still owed the bank R40000.
The debt counsellor couldn’t prove that he had consented to the process, signatures don’t add up, and the matter is now likely to go before the court.
Top debt counsellor, Nicola van der Merwe, warned that this is an example of what could go wrong with the process and that call centres are a huge problem in their industry.
“We have a lot of problems with these call centres listing consumers left, right and centre and not doing a proper job. That is precisely why you need to get a reputable registered debt counsellor to assist with your debt problems.”
* Georgina Crouth is a consumer watchdog with serious bite. Write to her at [email protected], tweet her @georginacrouth and follow her on Facebook.
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