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Friday, June 24, 2011

Debt Counsellor Fees

DCASA has recently notified all its members of the following change to the guidline for Debt Counselling Fees:

Debt Counselling Fees have not been reviewed since 2009 and DCASA has engaged with the NCR and DTI on an ongoing basis with the aim to finalise the fee review process. The need for a fee review was confirmed by an independent study conducted by the NCR in 2010 which concluded that Debt Counselling is not profitable based on the current fee structure.
The ongoing engagement with the NCR on the Debt Counselling Fee issue was based on the premise that Consumers should be protected from possible exploitation and/or overcharging by Debt Counsellors and that the fee should allow for the provision of a professional service based on acceptable standards by Debt Counsellors.
The proposed fee structure was referred to the NCR Board for approval and the Board requested the publication of the fees as well as consultation with the Competition Commission. The proposed fee structure was published in the Government Gazette and the NCR met with the Competition Commission. The NCR has received a formal reply from the Competition Commission and has subsequently informed DCASA that the matter will be referred to the next NCR Board meeting.
DCASA has not received a copy of the letter from the Competition Commission addressed to the NCR but instead DCASA made contact with the Competition Commission to obtain clarity on this crucial matter.

The position is as follows:
In terms of the Competition Act of 1998 restrictive horizontal practices are prohibited. Section 4(1) of the Competition Act states the following:
Any agreement between or concerted practice by, firms, or a decision by an association of firms is prohibited if:

(a) It is between parties in an horizontal relationship and it has the effect of substantially preventing or lessening competition in the market, unless a party to the agreement, concerted practice, or decision can prove that any technological, efficiency or other pro-competitive, gain resulting from it outweighs that effect”

From the abovementioned it is clear that DCASA cannot issue any Debt Counselling Guideline nor can anybody control the fee structure unless enabling legislation allows for this practice. For this reason DCASA withdraws the current Debt Counselling Fee Guidelines with immediate effect. DCASA has informed the NCR accordingly on 22 June 2011.

The NCR can issue Debt Counselling Fee Guidelines and control the implementation of the Fee Structure via the PDA’s and other mechanisms if enabling provisions are in place in the National Credit Act.

DCASA urges all Debt Counsellors to note that the provisions of the National Credit Act as well as the voluntary measures that are complementary to the provisions of the National Credit Act as amplified in the Code of Conduct for Debt Counsellors remain in force.


What does this mean?
It means that DC's can set their own fees for the moment.
Consumers can then decide who has the best rates

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