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Address by the Deputy Minister of Justice and Constitutional Development, the Hon JH Jeffery, MP at the AGM of the Council for Debt Collectors, held at Kloofzicht Lodge, Kromdraai Rd, Muldersdrift, 18 November 2019

Programme Director,
Chairperson, Mr Senzani,
Members of the Council,
Members of the Secretariat,
Ladies and gentlemen,

Thank you very much for the kind invitation and to be able to meet with the Council. I want to take this opportunity to reaffirm Government’s support for the Council and the important work it is doing.

Programme Director,
Over the past weekend, an article appeared on Fin24 which stated that there has been a significant increase in South Africans turning to debt counsellors to help them manage their credit.
According to the article overall debt levels - the total debt exposure to annual net income - have increased to 107%.
Over the last four years the number of consumers with assets such as vehicles or homes who are seeking debt counselling has increased from 49% to 56%.
Most concerning is the fact that the article says, and I quote,
"People who earn less than R5 000 a month need 63% of their income to repay their creditors. They are also charged the most interest. Those who earn over R20 000 a month have debt levels of on average 133% of their net annual income.”

Whilst, strictly speaking, the article may be about debt counsellors and not debt collectors, these figures paint a very real picture.
The figures tell us that South Africans are over-indebted.
Often debt becomes a vicious, out-of-control spiral, where people incur even more debt in order to cover existing debt.
And the more debt they incur, the bigger the chances of defaulting, and the bigger the role of debt collectors.

And this is where the Council has an invaluable role to play - particularly, when people who are already vulnerable because they do not know their rights fall prey to unscrupulous or unregistered debt collectors, or face harassment or humiliation by debt collectors.
That is why it is vital that we have the Council and that we support the Council in its mandate to regulate debt collectors, to ensure that debt collectors are registered with the Council and to protect the public by way of the investigation of complaints and the institution of disciplinary proceedings where necessary.
The fact that the Council actively regulates 18 000 registered debt collectors countrywide, tell us how big the debt collection industry is and why proper regulation is crucial.

I want to highlight some of the achievements of the Council during the 5th Administration, such as unqualified annual reports – in fact, this has not only been during the term of the 5th administration, but since the Council’s inception in 2003 – and a PR plan which reached 20 million consumers in 2018. In addition, the requirements as set out in the KING IV report on Corporate Governance were implemented.
Disciplinary hearings were held to enforce the Act, the Code of Conduct and Regulations where necessary and high levels of service delivery with a turnaround time of registrations of no longer than 7 days were maintained. Finally, all performance targets were reached.

The Council has also set out its priorities for the 6th Administration, which includes the continuation of good governance to ensure future unqualified audit reports and the expansion of the Public Relations plan to reach more consumers.
Furthermore, the Council aims to maintain high levels of service delivery, to promote the promulgation of the Debt Collectors Amendment Act and to ensure compliance with the Act, Code of Conduct and Regulations.

A number of issues have been referred to our Department as they require our intervention. These include:

On the question of the Promulgation of the Amendment Act, the inclusion of attorneys who do pre-litigation work and whether the objections raised by the profession is contributing to the unnecessary delay of the Amendment Act being promulgated, let me respond as follows:
The Council requested our Department to amend the Debt Collectors Act, 1998, to enable it to administer the Act more effectively, by allowing for a number of things such as:

The amendments were included in a lengthy Judicial Matters Amendment Bill which was prepared at the beginning of 2010 and released for public comment. 
Pursuant to comments received it was decided to split the Bill into two separate Bills, one dealing with the more “straight-forward” amendments of a non-contentious nature (the first Bill) and the other dealing with more substantive amendments of a more complicated and possibly contentious nature (the second Bill). 
It was further decided that the non-contentious amendments should be finalized and processed first. 
The amendments proposed by the Council were all contained in the second Bill and the Council was kept abreast of these developments.

At a meeting with the then Minister in 2011 the question arose whether the proposed amendments might not be better dealt with in a separate Debt Collectors Amendment Bill. 
It was decided that this is the appropriate course to follow.
A Debt Collectors Amendment Bill and accompanying Cabinet memorandum were submitted to the Minister in 2014.
The Department sought the Minister’s approval to submit the Bill to Cabinet with the view to introducing it in Parliament.  That Bill was also submitted to the Department of Trade and Industry for comments and their comments were incorporated in the Bill.   The Bill was also approved by the JCPS DG Cluster. 

It was at that stage that I requested the Department to amend the Bill in order to subject attorneys who do debt collecting to the provisions of the Act, making them debt collectors as defined in the Act, and accountable to the Council for Debt Collectors. 
Also at that time the Department formed part of a Cabinet-mandated task team at the National Treasury to look into the question of national household indebtedness.  The DTI also participated in that task team. 
One of the issues the Department was requested by the task team to look into was an amendment of the Act so as to require attorneys, who do debt collecting, to register with the Council. 

Both the National Treasury and the DTI felt strongly that this should happen in the interests of consumers generally and poor debtors more particularly. 
They were of the view that there are widespread abuses by attorneys in the collection of debts and they were also of the view that the Council seems to be more efficient in addressing abuses and disciplining its errant members than the regulatory bodies in the legal profession. 
They furthermore alleged that fees prescribed under the Act that debt collectors may recover in their debt collecting duties are less than what attorneys charge and may charge. 
National Treasury and the DTI undertook to provide the Department with examples of the abuses by attorneys.
From the documentation received it was clear that abuses do take place, for instance some attorneys obtain judgments by default without the knowledge of the debtors and load the initial amount owed by the debtor with exorbitant legal costs. 

This problem was, however, decisively addressed by the Courts of Law Amendment Act, 2017, which amended the Magistrates’ Courts Act, 1944.
The CLA Act mainly seeks to curb the abuses taking place with regard to judgments and emoluments attachment orders in the magistrates’ courts.  
The CLA Act further gives effect to the Constitutional Court judgment in University of Stellenbosch Legal Aid Clinic v Minister of Justice and Correctional Services relating to judicial oversight.

Because of this new development to include attorneys in the ambit of the Act, it was deemed necessary to subject the Bill to a broader consultation process.  The consultation process started with the publication of a Notice in the Government Gazette, inviting comments on 14 October 2015.
The closing date for comments was 30 November 2015.  Comments were received and summarized and it was evident that the attorneys' profession was vehemently opposed to the proposals.

The most pressing issue for the Council, at that stage, was to give the Council certain general powers, with particular reference to the acquisition of immovable property. 
The Council was renting property and wanted to purchase the property for itself and the lease was about to expire, hence the urgency of the matter. 
In order to assist the Council a new section was inserted in the Act by the Judicial Matters Act, 2017, pertaining to the powers and functions of Council.
It provides that in addition to any other powers or functions conferred upon or assigned to the Council by the Act, the Council may, amongst others, hire, buy or otherwise acquire such movable or immovable property as it may consider necessary for the performance of its functions, may raise money by way of a loan, hypothecate its immovable property as security for a loan, lend money against such security, make donations of property, and in general, perform such acts as may be necessary or expedient for the achievement of its objects.

The remainder of the issues in the Amendment Bill still need to be addressed to be taken forward. The further promotion of this Bill will be relatively straight-forward if the Bill does not include the compulsory registration of attorneys as debt collectors in terms of the Act. 
It could possibly be taken forward with relative ease and be included in the Department’s 2020 Legislative Programme. 

We also have, in a draft Judicial Matters Amendment Bill, an amendment to section 3 of the Debt Collectors Act, 1998, so as to increase the term of office of members of the Council for Debt Collectors from a maximum of three years to a maximum of 5 years and to provide that such a member is eligible for reappointment but for one additional term only.  This will promote continuity and efficiency.
Moreover, we are in the process of considering a recent request from the Council to increase the tariff of fees debt collectors are allowed to charge. 

With regards to the issue of property managers being excluded from the jurisdiction of the Council in the newly drafted Property Practitioners legislation, the Council has argued that the law will exclude property practitioners from any realistic form of regulation in those instances where they recover arrear rent and levies as it makes no provision for fees or any framework for the regulation of these actions.
In this regard, it must be noted that the Property Practitioners Bill referred to by the Council is now an Act of Parliament, namely the Property Practitioners Act, 2019 (Act 22 of 2019). 
It was assented to by the President on 19 September 2019, promulgated in the Gazette on 3 October 2019 and is not yet in operation. 

Prior to the Parliamentary process a Property Practitioners Bill was made available for comments.  In the Schedule to that Bill section 1 of the Debt Collectors Act, 1998, was to be amended by the amendment of the definition of “debt collector” to include a property practitioner as defined in section 1 of the Property Practitioners Act, who for reward collects debts owed to another on the latter's behalf.

In terms of this proposed amendment there was an attempt to amend our Act by excluding estate agents from the Act.  It is assumed that it is this that the Council has issues with. 
However, the newly published Act does not seem to have a similar provision; in fact there is no Schedule in the Act which amends any other Act consequentially. 
I am of the view that we need to obtain further information from the Council on this aspect which we could then take further. 
On the issue of debt collection being classified as a financial service, but the Council not being recognized as the regulatory body for the industry, this is unfortunately not a matter which falls under the domain of the Department of Justice and Constitutional Development, but is a matter for National Treasury. We will be able to put the Council in contact with National Treasury to possibly assist.

Finally, on the proposed paper on prescription and the criminalization of the recovery of a prescribed debt, these are also issues that would require further discussion with the Council.
I think what is important is that we keep the channels of communication between the Council and our Department open so that our Department can assist the Council on issues of concern.

I also want to commend the Council on the work it is doing, particularly in respect of outreach events and consumer education.
I have seen, with great interest, the work the Council has done, such as the recent consumer education event for the elderly in Tembisa, the consumer awareness event in Khayelitsha, its participation on Zibonele FM and its collaboration with the Council for Medical Schemes and the Office of the Consumer Protector.
I’ve also seen the community outreach events in Katlehong and in Modimolle, and the Council’s donation of a freezer and food to the Kopano Manyano home for the homeless.

Ladies and gentlemen,
There is a saying that these days there are three kinds of people – “the have’s, the have-not’s, and the have-not-yet-paid-for-what-they-have’s.”
Debt and credit are so much part of people’s daily lives that it affects all of us in some way or another.
Publilius Syrus, a Latin writer who was born in 85 BC, said “Debt is the slavery of the free”.  
He might have said these words more than 2000 years ago, but his words still ring true today.
Next week it will be Black Friday and Christmas is fast approaching – as they say “Christmas is the season when you buy this year’s gifts with next year’s money.”

And of course there will be those who over-spend, who buy on credit or who go even further into debt. But it also goes much wider than this, there are people who are forced to make debt simply to be able to survive.
Therefore it is vitally important that people know their rights when it comes to debt and the collection thereof.
For example, how many people know that collecting debts without being registered is a criminal offence?
Or that they have the right to request proof of registration from a debt collector before entering into an agreement, or that registered debt collectors are only allowed to call between 6am and 9pm Monday to Saturday.
Do they know that they have the right to be treated with dignity at all times and a right not to be harassed, threatened or humiliated?

Ladies and gentlemen,
The Council has a vital role to play in order to protect the public and to educate the people on consumer rights.
And I therefore want to wish you all the very best for a most productive AGM. You can be assured that our door is always open to support the Council wherever we can.

I thank you.