Debt counsellor fighting class action on behalf of the poor found guilty of breaching credit laws

Published Nov 17, 2021


The National Consumer Tribunal has found Clark Gardner, a director of Stellenbosch debt counselling firm Summit Financial Partners, guilty of contravening the National Credit Act and his conditions of registration as a debt counsellor. Gardner is one of the key players in a class action against allegedly unfair practices in the credit industry and has been outspoken in his criticism of the National Credit Regulator (NCR).

According to a press release on the website of the NCR, the judgment by the tribunal follows an investigation of complaints against Gardner by the NCR. The tribunal found Gardner guilty of contraventions related to, among others:

  • Failing to make determinations on whether consumers were over-indebted;
  • Failing to inform consumers of the consequences of applying for debt review;
  • Failing to update the records of consumers relating to debt review;
  • Failing to notify credit providers and credit bureaus that consumers had applied for debt review;
  • Failing to perform debt counselling functions personally;
  • Receiving payments from consumers who applied for debt review at the commencement of the debt review process; and
  • Using misleading and deceptive advertisements offering debt repayment reductions of up to 50% and free debt counselling services when his services were not free.

The tribunal imposed an administrative fine of R500 000 on Gardner, according to the NCR press release. Further, it ordered Gardner to appoint an independent auditor to audit his consumer files dating back three years in order to identify, among other things, consumers who had been overcharged. The auditors’ report must be given to the NCR once completed, and Gardner has been ordered to refund consumers identified by the auditors as having been overcharged.


The outcome of the investigation is seemingly at odds with news reports over the last few years on Gardner’s efforts, together with the Stellenbosch Law Clinic, in pursuing a class action on behalf of indebted consumers regarding the abuse of garnishee orders and high debt collection costs.

In December 2019, Personal Finance’s sister publication, Business Report, reported that Summit Financial and the Stellenbosch Law Clinic, representing 10 indebted clients, had won a ground-breaking judgment in the Cape High Court that would “put a cap on the outstanding garnishee order amounts owed, and the unregulated and unfair way in which debt collection costs had prejudiced the poor in the past”.

The court case listed no less than 49 respondents, including the National Credit Regulator, Banking Association of South Africa, Minister of Justice and Correctional Services, Minister of Trade and Industry, Council for Debt Collectors, National Forum on Legal Profession, Law Society of South Africa, most of the major banks, South African Human Rights Commission, Consumer Goods Council and some of the major retailers such as The Foschini Group, Truworths, Mr Price Group, Edcon and Lewis Group.

The report quoted Gardner as saying about 1.3 million consumers were paying debts via garnishee orders on their salaries, while about 1.5 million were likely to have paid off or contributed to paying towards those orders in the past three years.


Gardner subsequently criticised the NCR for not doing more to protect consumers. In a Personal Finance Rands and Sense opinion piece on January 20, 2020, “Is the NCR fulfilling its mandate to protect consumers?”, he wrote: “Despite [a] framework, which clearly requires that the regulator protect the interests of consumers, in particular those whose situation in life means that they are unlikely to be able to fend for themselves against big business, it appears that the NCR has chosen rather to uphold the interests of the corporate world at the expense of the vulnerable consumers.

“This assertion arises from the fact that the NCR has been noticeably absent from the efforts a number of parties have made to act against those in the debt collection industry, including certain attorneys, who are engaging in practices that go against the law and which see them milking the poorest in our society for fees to which they are not actually entitled. In fact, the NCR stands out for upholding the interests of those who charge fees in contravention of what the law allows, rather than intervening to protect the rights of debtors in South Africa.”


Gardner says he will be appealing the judgment. He issued the following statement this week:

“We are disappointed with the recent judgment against me personally and take the Tribunal’s ruling on this matter seriously.

“The context in which the complaint by the National Credit Regulator was made does, perhaps, requires some exposition. I have been open about my criticism of the NCR and their lacklustre approach in addressing the abuses prevalent in both our formal and informal consumer credit industry. As a result, Summit’s relationship with the NCR has been precarious for some time.

“As a result of the NCR’s failure to act, Summit has opted to take on some of the consumer fights ourselves and we have already referred several matters to court. Our most recent case, Bayport Securitisation v University of Stellenbosch Law Clinic, in which we request ask the court to confirm the limit placed on legal fees by the National Credit Act’s ultra in duplum rule, was opposed by the NCR. As was our case brought against Lewis Stores for charging first-time credit consumers a compulsory delivery fee, a practice we submit is prohibited by the National Credit Act.

“Summit has attracted over 150 000 consumer cases in the past few years. Most of whom seeking relief from their credit burden, or the garnishee orders related thereto. In turn, Summit has saved or refunded over R850m for these consumers who access the service via employer agreements. Of these 150 000 plus consumers, a mere 4 500 consumers required debt counselling solutions, as we favour other, less cumbersome, and invasive alternatives. In the judgment, 36 of these cases were found to have breached our processes and the NCR’s regulations.

“Debt counselling is a complicated process, requiring on average 140 touch points with credit providers, consumers, or the courts. We make use of three different systems being our debt counselling software, the NCR’s Debt Help system, and the Tribunal’s NCT filing application. Our processes were designed to comply with the tight deadlines and onerous requirements but disappointingly a few got past the proverbial goalie. The Act also doesn’t allow for a debt counsellor to make use of systems and processes in order to reach far residing employees and expects me personally to speak to each debt counselling client. This will be a significant disturbance to an industry where the top five debt counsellors (of which I am not one) manage over 80% of cases.

“The debt counselling industry has matured significantly over the last decade. The Debt Review Task Team Agreements released in 2015 and endorsed by the NCR, changed the debt review process significantly. We believe there is a need for these natural evolutionary changes in the debt counselling process to be addressed. Perhaps this is something our High Courts will have an appetite for.

“We ask that any discussion around the merits of the judgment be reserved until our appeal process has run its course.”


Related Topics:

financeconsumer watch