National Debt Mediation Association (NDMA) welcomes survey showing consumers benefit from alternative dispute resolution services

The National Debt Mediation Association (NDMA) has welcomed a survey by the National Credit Regulator (NCR) that shows that alternative dispute resolution services offered to consumers are largely seen as effective in resolving a range of disputes between

“Alternative dispute resolution, which includes mediation, offers consumers a way to resolve their disputes in a quicker, simpler and cheaper manner instead of following a court process that is adversarial and expensive.” says NDMA CEO, Magauta Mphahlele.

Within a short period of time, the NDMA has been able to establish its footprint across most provinces and has handled more than 6000 disputes and complaints with more than 70% success rate for cases with a resolved outcome. The high success rate of alternative dispute resolution is confirmed by the research report which reports that 85% of respondents were satisfied with ADR services provided by various entities and would recommend them. However, the report indicates a low usage of free services offered by the NDMA, NCR, Provincial offices and Ombuds. It is important to note that the low usage might also be due to private companies having very big marketing budgets and therefore consumers being more aware of their existence. This is supported by the finding of the report that a majority of consumers heard about the services through newspapers, radio and television.

“Over the past few years, the NDMA has been advocating for mediation as it is able to help consumers through the often legally complex and technical aspects of credit and payment disputes and offers huge benefits to consumers, especially low income consumers who most times cannot afford the services of a lawyer,” says Mphahlele.

The NDMA, which is currently in the process of transitioning into an independent consumer services NGO is considering applying a mixed model where those who can afford the dispute resolution services are charged a nominal fee, but those who cannot afford it are assisted for free through donor funding or partnership referrals. This is because the report indicates that consumers sometimes prefer to pay for these services as this gives them the confidence that their ADR agent will be on their side and will be committed to ensuring the case is resolved in their favour. This should however not discount the important role played by the various Ombud schemes as they service an underserved and often low income and vulnerable market. Consumers need to understand that ADR often happens through mediation where the purpose is to find win win solutions and therefore there is always a balance of rights and responsibilities.

The report proposes that ADR agencies need to be regulated. While the NDMA agrees with this proposal to some extent, it is important to note that most service providers, including ADR service providers are regulated by the Consumer Protection Act, which covers advertising, service standards, contracting and fair pricing. It is therefore important to consider what is already covered in existing legislation before additional regulations are imposed. Concerns raised by the NDMA regarding some ADR agents are misleading advertising, overcharging and lack of transparency. The NDMA and the various Ombuds report publicly on the cases received and resolved and this ensures accountability and transparency.
The services offered by the NDMA include:

• A national helpline that provides information on any credit related matter, including the explanation of the options available to consumers to resolve their debt problems;

• Budgeting and payment plan assistance where consumers are experiencing difficulties with repaying their debt;

• Assistance with credit disputes, except debt counselling complaints which are referred to the NCR;

• Direct or employer hosted consumer education workshops;

• Referral assistance where the NDMA does not have jurisdiction.