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Employers urged to encourage debt-stressed employees to seek assistance

21 September 2011 National Debt Mediation Association

“Employers should play a more prominent and active role in helping their employees to free themselves from the clutches of a dire debt stranglehold,” says Magauta Mphahlele, the chief executive officer of the National Debt Mediation Association.

“Generally, employees who are having financial difficulties are prone to experience high levels of stress and ultimately underperform at work,” says Mphahlele.

Her comments come as the Credit Bureau Monitor for the second quarter of this year, shows that the number of consumers with impaired records increased by 174,000 to 8.80 million from the previous quarter.

Having impaired records, means that consumers are in arrears, have judgments or administration orders against their names, or they have an adverse listing.

South Africa has about 18.84 million credit-active consumers. High levels of financial stress could be one of the factors that contributes to a decrease in productivity levels and an increase in instances of white collar crime as employees try and find means to increase their income so that they can meet their debt obligations.

“This clearly shows that employers should do a lot to help their employees get their finances on track,” says Mphahlele.

Mphahlele says the debt situation in South Africa has reached a crisis level and it was a ticking time bomb for companies.

Not paying enough attention to help your personnel free themselves could have a domino effect at the workplace.

Employees who have financial difficulties usually experience high levels of stress and related illnesses which could result in inferior results in their work assignments, and absenteeism.

“This could lead to a disastrous impact in many company’s bottom line. In addition, the employee’s low morale has the likely potential of rubbing off on others within their space and having a negative impact on the company culture and overall performance,” said Mphahlele.

She advises that one way of assisting credit-active consumers to deal with their debt challenges, is for companies to form partnerships with institutions that can provide advice and tangible assistance to resolve cases of over indebtedness.

The advent of the NDMA on the debt management and review landscape has seen the successful facilitation of debt restructuring negotiations between credit providers and consumers on their own or represented by debt counsellors.

Mphahlele says the mediation role being played by the NDMA has resulted in consumers and credit providers concluding debt restructuring agreements that led to the prevention of the seizure of homes, vehicles, and other valued possessions belonging to hundreds of debt-stressed consumers.

Armed with experience and in-depth knowledge about the industry, the NDMA is supported by the Credit Industry and is responsible for overseeing the implementation of the “Industry Code of Conduct to Combat Over Indebtedness”. The organisation also seeks to provide advise and support to debt-stressed consumers through a team of dedicated Call Centre agents and Case Officers. “The NDMA is increasingly gaining popularity as South Africa’s free solution to amicable debt resolution and mediation,” she says.

Banks, clothing retailers, micro-lenders, motor financiers, and furniture retailers form part of the NDMA’s membership that have made a commitment to assist debt stressed consumers within the ambit of the Industry Code of Conduct. Combined, the NDMA’s membership base represents more than 90% of the value of the credit advanced in South Africa.

The services of the NDMA are free and consumers can seek advice about the options available to them to deal with financial hardship as well as lodge complaints with the NDMA on non compliance with the industry code of conduct.

For more information visit http://www.ndma.org.za/, call 0861 11 6362 or send fax to 011781 0589.

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