National Credit Regulator takes strong enforcement action against unscrupulous debt counsellor

The National Consumer Tribunal (NCT) has ruled in favour of the National Credit Regulator (NCR) against a debt counsellor who misappropriated nearly R170000, 00 of consumer funds.

Zimkitha Hazel Zilo was a registered debt counsellor who created a fictitious credit provider linked to a bank account under her brother’s name. She then added this fictitious credit provider as a credit provider to which the Payment Distribution Agent (PDA) had to distribute funds. As a direct result of her actions, the PDA paid an amount close to R 170000.00 into this account. In terms of her registration conditions, Zilo had to make use of an approved PDA to distribute funds to creditors.

“The NCR was informed of the irregularity by the PDA and conducted a thorough and speedy investigation into the matter,” says the NCR’s Investigations and Enforcement Manager, Advocate Jan Augustyn. The NCR then launched an application for the cancellation of Zilo’s registration as a debt counsellor. “Zilo’s registration as a debt counsellor was cancelled with immediate effect,” says Augustyn. The debt counsellor was ordered to refund all consumer funds misappropriated with interest to all affected consumers.

The Tribunal ruled that by creating a fictitious account and defrauding consumers of funds intended for distribution to their credit providers, Zilo had contravened the National Credit Act and her conditions of registration.

“The NCR regards this as a very serious abuse because consumers under debt review can lose their homes and most valuable assets if payments are not made as per the agreement with their credit providers,” says Augustyn.

The Tribunal ordered Zilo to repay the money plus 15, 5% interest per annum to the PDA within 20 days and to send proof to the NCR within 45 days of the order being granted. Failing this, she may be liable to face a fine or imprisonment for a period not exceeding ten years or she may be liable to both a fine and imprisonment.

Augustyn adds that “the ruling demonstrates that the National Credit Regulator will protect consumers under the debt review process from unscrupulous debt counsellors. The NCR has also referred the matter to the South African Police Services (SAPS) for further criminal investigations given the serious nature of the matter and serious light in which the NCR views the matter.”