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Office of the Credit Ombud sees 29,3% increase in the number of consumer disputes closed during 2010

14 April 2011 Credit Ombud

· 3870 disputes opened, 90% closed
· Ombud ruled in favour of consumers in 69% of cases
· 86% of cases resolved within 60 days
· Jurisdiction extended to include non-bank credit and debt counselling disputes

The Office of the Credit Ombud today released its 2010 annual report, showing significant strides made in the resolution of complaints from consumers and businesses that have been negatively impacted by credit bureau information and disputes with credit providers.

“As a result of the depressed global economy, the average consumer is still hard pressed and requires protection and assistance when it comes to ensuring accurate information is held on their credit profiles,” says Credit Ombud, Manie Van Schalkwyk. “Our report shows that we continue to be a helping hand for thousands of consumers each year.”

During 2010, 3870 disputes were opened at the office of the Credit Ombud, which changed its name from the Credit Information Ombud during the period. The total number of disputes closed increased by 29,3% to 3550 in 2010 (2009:2745). This means that more than 90% of all cases were finalised. The Credit Ombud ruled in favour of consumers in 69% of cases and 86% of all cases were resolved within 60 days, compared to 79,48% the previous year.

“We managed to put R700 000 back in the pockets of consumers,” says Van Schalkwyk.

The majority of the cases (29%) of cases closed during the year involved insufficient or incomplete credit information listed on the credit receiver’s credit profile. About 22% of cases were the result of negative credit information remaining displayed on a credit bureau for a longer period than dictated by the National Credit Act.

“In the area of non-bank credit disputes a major concern is where payments are misallocated or statements are not forthcoming from credit providers,” says Van Schalkwyk. “When it comes to credit information, monthly payment profile records are not being updated by credit providers and rescinded judgements remain active on the credit bureaux.”

He says the increase in fraudulent rescission documents being produced by consumers has led to credit bureaux taking longer than the required 20 working days to investigate these documents.

From 1 January 2010, the Credit Ombud’s mandate was extended to include non-bank credit complaints. Although the take up was slow initially, the office now employs four full-time legally qualified staff to deal with this area. As its existence is now becoming better known, its case load is increasing. During 2010 this department investigated 558 disputes and closed 428 of these, saving consumers R700000.

The office of the Credit Ombud was also approached by the credit industry, debt counsellors, payment distribution agents as well as the National Credit Regulator (NCR) to incorporate and provide an ombud service for debt counselling matters. This after a task team set up the by the NCR recommended that an Ombud should be set up to assist consumers under debt review.

“We will now ensure compliance with the various codes of conduct adopted by credit providers, debt counsellors and payment distribution agents,” says Van Schalkwyk. “In the year ahead we’re looking forward to helping consumers under debt review who previously had limited means of recourse in disputes with their debt counsellors and/or their credit providers.”

He says that including debt counselling matters in the Credit Ombud’s jurisdiction will have a positive impact on volumes of debt review disputes clogging up the judicial system. “Hopefully most of these cases will now be resolved out of court,” he says.

“The extension of our mandate means we cover the full ambit of the credit and credit information life cycle,” adds Van Schalkwyk. “We’re now able to provide a one-stop service.”

The Credit Ombud showed that it was able to resolve 87% of cases through intervention, without extended deliberation with the credit providers or credit bureaux. “The Credit Ombud did not make any rulings in 2010 which was a very positive sign as it demonstrates a willingness from credit providers and credit bureaux to resolve cases,” he says.

The Credit Bureau Monitor, published quarterly by the National Credit Regulator (NCR) showed that there were 18,51m credit active consumers in December 2010. Of these 46,5% had impaired credit records – referring to those that had any account is three or more payments in arrears or has an ‘adverse listing” or if they have a judgement or administration order against their name. “In simple terms this means that 8,61m people will find it difficult to access credit as a result of their credit record,” says Schalkwyk.

In an effort to find more avenues for financial consumers to lay complaints, the Credit Ombud lead an initiative to create a centralised helpline for all financial ombuds and regulators during 2010. “This will assist consumers by eliminating any confusion regarding who to contact when they want to lodge a complaint in the financial services sector,” comments Van Schalkwyk.

In association with the Department of Trade and Industry, FinMark Trust and African Bank, the Credit Ombud’s office also helped establish the Money Advice Association, trading as ‘Imali Matters’. This initiative seeks to establish offices in communities where consumers will receive independent face-to-face guidance on financial matters. Financial services consumers will also be able to lodge complaints at these offices. During 2010 a pilot was rolled out in Germiston in Durban and Wynberg in the Western Cape. “We plan to roll the programme out nationally over the coming year if these prove successful,” says Van Schalkwyk.

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