In a move to clean up the debt counselling industry, the National Debt Counsellors’
Association (NDCA) has submitted a key proposal to the government that would introduce stricter “fit-and-proper” requirements for practitioners.
The aim is to prevent unregistered or unethical individuals from posing as legitimate debt counsellors, and to align the sector with the rest of the financial services industry.
The proposal recommends enhancing the existing regulations of the National Credit Act with provisions from the Conduct of Financial Institutions (Cofi) Bill and the Treating Customers Fairly (TCF) principles.
The association has proposed:
• The introduction of higher minimum qualifications, more direct relevant experience, and apprenticeships to supplement existing requirements like regulatory exams and continuous professional development.
• Practitioners be subjected to background checks to ensure they do not have criminal convictions for fraud, dishonesty or financial misconduct, as well as a requirement that they must complete an annual fit-and-proper assessment.
• Debt counsellors must demonstrate that they have the resources, processes and financial stability to conduct business effectively and comply with
governance standards.
• Oversight roles be clarified, similar to the insurance industry, with registered debt counsellors supervising “debt counsellors in training” for a period.
René Moonsamy, the newly elected chairperson of the
NDCA, said debt counsellors hold positions of trust, guiding financially vulnerable people.
“Arguably, the debt counselling licence is the single most important financial services licence granted in South Africa. This proposal aims to align the debt counselling sector with the rest of the financial services industry,” Moonsamy said.
The NDCA believes applying the Cofi framework will ensure uniform standards, improve consumer protection, and enhance transparency. Debt counsellors would also be required to embed the six TCF principles into their business models, fostering a customer-centric culture.
The proposal was submitted to the Department of Trade, Industry and Competition and the National Credit Regulator last month. The NDCA hopes its recommendations will be incorporated into the upcoming amendments to the National Credit Act and its regulations.
