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Is the NCR fulfilling its mandate to protect consumers?

Published Jan 20, 2020



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It’s common practice for countries to set up regulatory bodies to ensure that various industries act in appropriate ways. Generally, these bodies are tasked with providing a suitable framework within which the industry operates, geared to minimise the opportunity for fraud or other criminal actions to take place, as well as to protect the various stakeholders involved.

A significant stakeholder that should be protected is consumers. They have both responsibilities and rights, and it is important that big business is not given the leeway to exploit consumers - this is where the regulator has an important part to play. These goals are common to jurisdictions across the globe. This example from the UK sums up the role of a regulator: a regulator has a responsibility “to promote public awareness and understanding; offer the consumer an appropriate degree of protection”

In South Africa, one of the regulators that plays a crucial role in our economy is the National Credit Regulator (NCR). Its focus is on the accessibility of credit in a regulated manner to the consumer, and its governing legislation, the National Credit Act, refers to the need for the regulator to address the needs of historically disadvantaged people, those with low incomes, and people who live in rural areas.

Despite this 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.

It is telling that the NCR was named as a respondent in a case brought by Summit Financial Partners and the Stellenbosch Law Clinic in the Western Cape High Court, geared to seek clarity on the extent of fees that can be charged to debtors subject to debt collection. (The case is University of Stellenbosch Law Clinic & Others v The National Credit Regulator & Others - see “Groundbreaking victory for the poor as judge rules in debt collection case”).

Why is a regulator identified in this regard, rather than only the debt collectors involved? Surely the regulator should rather be known for what the Act stipulates its role to be - to address the needs of the various people most likely to require an intervention that will protect them?

Judgment in the case was announced last month.

It is clear from the judgment that there will be no tolerance of excessive charges by debt collectors in future. It will certainly be interesting to see whether the NCR now changes its approach and shows that it will be acting on a core element of its regulatory responsibility: the protection of those most vulnerable in our society.

Clark Gardner is the chief executive of Summit Financial Partners.

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