Voluntary Debt Mediation or ADR NOT supported by National Credit Regulator November 2014
1. The National Credit Regulator (NCR) is aware that the Banking Associationof South Africa (BASA) and other industry associations are in discussions with
various stakeholders to introduce voluntary debt mediation. The NCR stopped
the implementation of voluntary debt mediation in 2012 because it undermines
the National Credit Act 34 of 2005 (NCA) and statutory debt counselling and will
prejudice consumers.
2. The NCA makes provision for debt counselling and a mechanism for voluntary
debt restructuring in section 86 which must be supported and used by all credit
providers. These mechanisms protect both consumers and credit providers by
ensuring debt restructuring which ensures that all credit providers are eventually
repaid.
3. The NCR does not support voluntary debt mediation and will not approve it
under any circumstance. The NCR has written letters to BASA and other industry
associations to cease all work relating to voluntary debt mediation.
4. Credit providers, debt counsellors, credit bureaus and payment distribution
agents are requested not to participate in discussions to introduce voluntary
debt mediation. In particular, credit providers must continue using statutory debt counselling and allow all consumers to use statutory debt counselling.
