The following article has been copied from "the latest" Adra Link Magazine written by the Association of debt recovery agents' ceo Marius Jonker on the issue of Prescription and their view on Section 126B of the NCA as amended on the 15th of March 2015.
I will underline the issues where I am commenting on and will paste my comments in Red ink.
Section 126B and Prescription
Section 126B is a prominent feature of The National Credit Act as
amended. There are several interpretations of section 126B
which vary substantially. (*1)Interpretations encountered thus far
includes that the wording of section 126B is unconstitutional
and as such not truly enforceable, that section 126B only creates
a duty to educate the consumer on the defence of prescription
and thereafter normal collection processes may follow until the
consumer successfully raises the defence of prescription,(my comments:)
(*1)This, of course, would be the view of creditors. We have seen various attempts from creditors to try and enforce the collection of very evidently prescribed debt and bullying consumers into agreeing to pay on these accounts or to sign an AOD. Our view is that these attempts are criminal in its best form and that consumers take the legal route and lay charges with this amendment as basis.As is mentioned further on in the article transgressions can cost a creditor dearly and consumers must be wide awake and take them head on should it seem to be an attempt at collecting on prescribed debt after the date of 15 March 2015................. Our view is clear: The insertion with the amendment makes it clear that
that
the section creates an onus on the credit provider to ensure that
no enforcement action is taken on potentially prescribed debt
and should a debt be prescribed that the credit provider (nor its
agent the debt collector) may take any enforcement action on
the account whatsoever.
To further complicate the matter many credit providers have
based their internal policies on how to deal with prescription not
on legal opinion but on potential reputational risk they may
incur.
Readers are requested to share legal opinion they may have
obtained on this and any other topic with the ADRA office. It is
our intention to provide members with as many available
opinions as possible to assist them in making their own decision
on which interpretation they believe is correct. Where requested
legal opinions will not be published but used for internal
information purpose only.
Irrespective of the opinion the member may prefer, credit
providers and debt collectors will have to implement a sound
prescription management policy backed by the necessary
systems. A transgression of the section may result in a fine being
imposed on the credit provider to a maximum amount of R1m or
10% of its annual turnover per transgression. Credit providers
will insist on outsourced debt collection service providers having
a sound policy and systems in place to prevent such liability for
the credit provider/client.
Any prescription management policy will have to deal with the
following basic issues:
1. Ensure all information relevant to prescription is received
from the credit provider when receiving instructions. Such
information will include the last payment date, the date when
the debt became due and payable, default dates and when
the prescription period commenced, what the relevant
prescription period is and any events which might have
interrupted or stayed prescription.
2. The debt collector will have to train all staff on the topic of
prescription and ensure that all events which interrupt or stay
prescription are identified and recorded. Where prescription
is interrupted as a result of an acknowledgement of debt
(implicit in an undertaking to pay the debt in instalments or
otherwise) the recordings of such conversations will have to
be stored for the life span of the account.
3. Prescription interrupting or staying events will have to be
reported to the credit provider/client.
4. Accounts nearing potential prescription in the hands of the
debt collector will have to be identified, the credit
provider/client informed (in writing) and specific instruction
obtained on how to deal with such accounts.
It will be prudent for members to address the topic of
prescription in detail in their service level agreements with
clients. In particular members are advised to stipulate under
which circumstances the member will be liable to the credit
provider for any losses suffered by the credit provider/client as a
result of debt prescribing in the hands of the debt collector or a
penalty imposed for a transgression of section 126B. Ideally the
debt collector will want to be completely absolved of liability but
this might not always be achievable.
Members will be kept advised of any developments on this front
and are members reminded to please send legal opinions on this
(or any other relevant topic) to the ADRA office at
info@adraonline.co.za.
Opinions and views will be published in the “Members Area” of
the website as and when they become available. Two detailed
opinions were placed at time of drafting of this message. It is not
within ADRA's mandate to prescribe to members how to manage
their businesses or to provide them with legal opinion. The
views published (as with all other views and opinions) are
subject to the full disclaimer appearing on the website.
Marius Jonker
CEO
|
I will underline the issues where I am commenting on and will paste my comments in Red ink.
Section 126B and Prescription
Section 126B is a prominent feature of The National Credit Act as
amended. There are several interpretations of section 126B
which vary substantially. (*1)Interpretations encountered thus far
includes that the wording of section 126B is unconstitutional
and as such not truly enforceable, that section 126B only creates
a duty to educate the consumer on the defence of prescription
and thereafter normal collection processes may follow until the
consumer successfully raises the defence of prescription,(my comments:)
(*1)This, of course, would be the view of creditors. We have seen various attempts from creditors to try and enforce the collection of very evidently prescribed debt and bullying consumers into agreeing to pay on these accounts or to sign an AOD. Our view is that these attempts are criminal in its best form and that consumers take the legal route and lay charges with this amendment as basis.As is mentioned further on in the article transgressions can cost a creditor dearly and consumers must be wide awake and take them head on should it seem to be an attempt at collecting on prescribed debt after the date of 15 March 2015................. Our view is clear: The insertion with the amendment makes it clear that
that
the section creates an onus on the credit provider to ensure that
no enforcement action is taken on potentially prescribed debt
and should a debt be prescribed that the credit provider (nor its
agent the debt collector) may take any enforcement action on
the account whatsoever.
To further complicate the matter many credit providers have
based their internal policies on how to deal with prescription not
on legal opinion but on potential reputational risk they may
incur.
Readers are requested to share legal opinion they may have
obtained on this and any other topic with the ADRA office. It is
our intention to provide members with as many available
opinions as possible to assist them in making their own decision
on which interpretation they believe is correct. Where requested
legal opinions will not be published but used for internal
information purpose only.
Irrespective of the opinion the member may prefer, credit
providers and debt collectors will have to implement a sound
prescription management policy backed by the necessary
systems. A transgression of the section may result in a fine being
imposed on the credit provider to a maximum amount of R1m or
10% of its annual turnover per transgression. Credit providers
will insist on outsourced debt collection service providers having
a sound policy and systems in place to prevent such liability for
the credit provider/client.
Any prescription management policy will have to deal with the
following basic issues:
1. Ensure all information relevant to prescription is received
from the credit provider when receiving instructions. Such
information will include the last payment date, the date when
the debt became due and payable, default dates and when
the prescription period commenced, what the relevant
prescription period is and any events which might have
interrupted or stayed prescription.
2. The debt collector will have to train all staff on the topic of
prescription and ensure that all events which interrupt or stay
prescription are identified and recorded. Where prescription
is interrupted as a result of an acknowledgement of debt
(implicit in an undertaking to pay the debt in instalments or
otherwise) the recordings of such conversations will have to
be stored for the life span of the account.
3. Prescription interrupting or staying events will have to be
reported to the credit provider/client.
4. Accounts nearing potential prescription in the hands of the
debt collector will have to be identified, the credit
provider/client informed (in writing) and specific instruction
obtained on how to deal with such accounts.
It will be prudent for members to address the topic of
prescription in detail in their service level agreements with
clients. In particular members are advised to stipulate under
which circumstances the member will be liable to the credit
provider for any losses suffered by the credit provider/client as a
result of debt prescribing in the hands of the debt collector or a
penalty imposed for a transgression of section 126B. Ideally the
debt collector will want to be completely absolved of liability but
this might not always be achievable.
Members will be kept advised of any developments on this front
and are members reminded to please send legal opinions on this
(or any other relevant topic) to the ADRA office at
info@adraonline.co.za.
Opinions and views will be published in the “Members Area” of
the website as and when they become available. Two detailed
opinions were placed at time of drafting of this message. It is not
within ADRA's mandate to prescribe to members how to manage
their businesses or to provide them with legal opinion. The
views published (as with all other views and opinions) are
subject to the full disclaimer appearing on the website.
Marius Jonker
CEO
|
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