National Credit Regulator v Nsibande (NCT/3915/2012/57(1)(P)NCA) [2013] ZANCT 3 (18 January 2013)

IN THE NATIONAL

CONSUMER TRIBUNAL

HELD AT CENTURION

CASE NUMBER: NCT/3915/2012/57(1)(P)NCA

DATE:18/01/2013

In the matter between:

NATIONAL

CREDIT REGULATOR ….........................................................APPLICANT

and

NOKUTHULA

NSIBANDE …........................................................................RESPONDENT

DATE OF HEARING: 28 August 2012

CORAM:

D Terblanche – Chairperson & Presiding member

P Beck – Member

X May – Member

JUDGMENT AND REASONS

The Applicant is the National Credit Regulator (“Applicant”) a juristic person established in terms of section 12 of the National Credit Act (NCA), Act 34 of 2005.

The Respondent is Nokuthula Nsibande (“Respondent”), an adult female debt counselor from Witbank.

Respondent has been registered as a debt counselor by the Applicant on 13 October 2008 under registration number NCRDC556, subject to certain general and specific conditions.

The Respondent practised in the capacity of debt counselor from offices situated at Cosmos Centre, Room 122, 1st Floor, Mandela Road, Witbank.

Applicant applied for an order to the Tribunal for –

The cancellation of the registration of Respondent, in terms of section 57(1);

Declaring the conduct of the Respondent in contravention of her conditions of registration and the Act and for her conduct to be declared prohibited conduct in terms section 150(a) of the Act;

Requiring the Respondent to repay the consumer any amounts received for payment to the credit providers of the consumer that were not paid over to credit providers;

Ordering the respondent to surrender her files to the Applicant with a list of past and present clients; and

Any other appropriate order

on the basis of Applicant’s allegations of Respondent contravening the general and specific conditions of registration and provisions of the NCA.

Applicant served the notice of its application on Respondent by facsimile and followed that up with delivery to her registered address on 6 March 2012.

The Respondent was accordingly required to serve and file an answering affidavit on Applicant and the Tribunal by 4 April 2012 in the event of Respondent wishing to oppose the application.

The Respondent failed to serve and file her answering affidavit to the Applicant’s application and accordingly the Applicant brought an application for a default order in terms of Rule 25(2) on 26 April 2012.

The application was enrolled for a hearing on a default basis on 28 August 2012.

THE APPLICANT’S

CASE

During November 2010 Applicant received a complaint from a Mr Khoza alleging that he applied for debt review with the Respondent; paid an amount of R8,700.00 to the Respondent to distribute to his creditors; and that Respondent failed to distribute these funds to his creditors.

When Applicant’s debt counseling monitors attempted to interview Respondent about the allegations levelled by Mr Khoza, they failed to locate her but found a certain Siboniso at her office premises. Siboniso identified himself as the Respondent’s brother. He told the monitors that the Respondent returned to Swaziland during 2010 as a result of ill health and that he was operating the debt counseling business on her behalf. Applicant stated that Siboniso is not a registered debt counselor and was unable to provide information pertaining to the consumer’s funds which were allegedly not paid over to his creditors.

Applicant’s inspector, Mr Russel Willoughby, when he visited the Respondent’s premises in December 2011 was unable to access all the files of the Respondent, as the premises was vacant. He was also unable to make telephonic contact with the Respondent. He did however interview the complainant and received documentation from the Applicant’s representatives who attended at the premises of the Respondent on 8 June 2011.

Applicant’s inspector found that the Respondent has repeatedly contravened the NCA and the general and specific conditions of her registration in the following respects –

The Respondent failed to comply with General Condition 2 of her Conditions of Registration. In terms of this condition the Respondent was obliged to perform debt counselling in a manner that is consistent with the purposes and requirements of the Act and to in all instances act professionally and reasonably in a manner that was timely, fair and non-discriminatory.

The Respondent failed to comply with the specific condition of registration which prohibits her from receiving funds from consumers for distribution.

The Respondent overcharged a consumer for application fees in contravention of Section 86(3)(a).

The Respondent failed to comply with the timeframes prescribed by section 86(6) read with Regulations 24(6) and (10)

APPLICABLE LAW AND FACTS

The provisions of the NCA relevant to this matter can be found in -

Section 48(3) of the NCA provides that –

‘The National Credit Regulator, having regard to the objects and purposes of this Act, the circumstances of the application and the applicable criteria set out in subsections (1) and (2), may propose any conditions on the registration of an applicant by delivering a written notice in the prescribed manner and form setting out the proposed conditions, and the reasons for them.’

Section 48(4) of the NCA provides that –

‘Conditions contemplated in subsection (3) may extend to an associated person, and in any case must be-

(a) reasonable and justifiable in the circumstances; and

(b) in the case of a regulated financial institution, consistent with its licence’

Section 86 (3)(a)

This section provides that “...A debt counsellor (a)-may require the consumer to pay an application fee, not exceeding the prescribed amount, before accepting an application in terms of… section 86(1)”.

Section 86(6) read with Regulations 24(6) and (10)

“Section 86(6) provides that “A debt counsellor who has accepted an application in terms of this section must determine, in the prescribed manner and in the prescribed time…”

The “prescribed manner” and “prescribed time” are set out in regulations 24(6) and 24(10). Section 24(6) of the Act states that within 30 business days after receiving an application in terms of s86(1) of the Act, a debt counselor must make a determination in terms of s86(6). Regulation 24 (10) states that after completion of the assessment, the debt counsellor must submit a form 17.2 to all the affected credit providers and all registered credit bureaux within 5 days.

Section 57 (1) of the NCA provides that …

“(1)… a registration in terms of the act may be cancelled by the Tribunal on request by the National Credit Regulator, if the registrant repeatedly-

fails to comply with any condition of its registration;

…; or

contravenes the Act.”

The word “repeated(ly)” used in section 57(1) is defined in the Encarta dictionary as an event occurring in the similar fashion as was. The NCA does not define the word “repeated”. In a deregistration application in the case of National Credit Regulator v HD Finance Group CC1 it was held that the credit provider had repeatedly contravened the Act in terms of section 133 by keeping numerous bank cards and pin codes of various consumers.

From the founding affidavit of the Applicant before the Tribunal and the annexed inspector’s reports with its own annexures, uncontroverted by the Respondent, Respondent -

Failed to comply with her special conditions of registration in that she received and undertook to distribute payments for consumers in the case of the complainant Mr Khoza; and

Left her practice in the hands of an unregistered person to manage in her absence.

The Respondent charged a consumer an application fees for her services in the amount of R300.00 in contravention with Section 86(3)(a) and the regulations prescribed under the NCA.

The Respondent failed to comply with the timeframes prescribed by section 86(6) read with Regulations 24(6) and (10) in that instead of completing the assessment within 30 days from the date of receiving an application it was delayed by almost three months.

Taking into consideration the information from the NCR Debt Help system as well as the files of the complainant which was investigated by the Applicant, it is clear that the Respondent did not comply with the timeframes as required by Section 86 read with Regulation 24. It also seems that on the file of the complainant, the Respondent did not comply with the timeframes, did not refer the matter timeously to the Tribunal or to a Court and received payment from the consumer in contravention of her Special condition of registration.

The Respondent furthermore left her debt counselling practise in the care of her brother who is an unregistered person and prohibited from performing debt counselling services in terms of section 44(2). This conduct of the Respondent is in contravention of general condition of registration 2 and is irresponsible and detrimental to consumers.

Section 48 of the NCA allows the Applicant to impose conditions of registration on registrants. Section 48(3) provides that the Applicant , having regard to the objects and the purposes of the NCA, the circumstances of the application and the applicable criteria set out in subsections (1) and (2), may propose any conditions on the registration of an applicant. A breach/es of conditions of registration could result on successful deregistration application of a registrant by the Applicant. The Tribunal held in the Ferreira - matter2 that the NCR is entitled to impose conditions of registration in terms of section 48 over and above the requirements of NCA and

regulations.

The Tribunal finds that the Respondent repeatedly contravened -

her general conditions of registration and her specific condition of registration;

the following sections and regulations of the National Credit Act, 2005 –

section 86 (4) (b) (i) ) read with regulation 24(2);

section 86 (6) read with regulation 24 (6) and regulation 24(10).

The Tribunal views the contraventions by the Respondent in a very serious light. The Respondent’s failure to comply with the procedures set out in the Act places consumers at serious risk. This was particularly evident in the Khoza matter where Khoza was placed under extreme pressure when money he paid to the Respondent to pay over to his creditors was not paid.

Section 150 (a), (g), (h) and (i) provides that;

“In addition to its other powers in terms of this Act, the Tribunal may make an appropriate order in relation to prohibited conduct or required conduct in terms of this Act, including-

(a) declaring conduct to be prohibited in terms of this Act;

…

(g) suspending or cancelling the registrant’s registration, subject to section 57(2)

(h) requiring repayment to the consumer of any excess amount charged, together with interest at the rate set out in the agreement; or

(i) any other appropriate order required to give effect to a right, as contemplated in this Act.”

The Tribunal is cognisant of the fact that cancelling a registrant’s registration has very serious consequences. For a debt counselor, this means that she must cease acting as a debt counselor. In the case of the Respondent, albeit her business will be at an end, it will however not impact her significantly as it appears from the evidence before the Tribunal that she for all intents and purposes abandoned her office and her clients. De-registration of the Respondent in this matter is an appropriate order.

The Respondent’s conduct in repeatedly contravening the general conditions and the specific condition of her registration, and also her conduct in repeatedly contravening the Act, is declared to be conduct prohibited in terms of section 150(a) of the Act. ‘prohibited conduct’ is defined in section 1 of the NCA as an act or omission in contravention of this Act, other than an act or omission that constitute an offence under the Act, by an unregistered person who is required to be registered to engage in such an act; or a credit provider, credit bureau or debt counselor. (Section 1 of the NCA).

The Applicant has also requested that the Respondent be ordered to repay moneys received from the consumer. The Tribunal powers in respect of the orders it may grant are set out in section 150 of the NCA. In terms of section 150(h) the Tribunal may order repayment to a consumer of any excess amount charged, together with interest at the rate set out in the agreement. In terms of the evidence provided by the Applicant, it is clear that Mr Khoza was overcharged and that he should be refunded.

Regarding an order for the Respondent to surrender her files to the Applicant with a list of past and present clients, this is necessary to ensure the Regulator takes possession of those files and ensures that consumers’ rights are safeguarded.

ORDER OF THE TRIBUNAL

The Tribunal issues the following order:

27.1. The Respondent’s conduct by repeatedly contravening the general conditions and the specific condition of her registration, and also her conduct in repeatedly contravening the NCA, is declared to be prohibited conduct in terms of section 150(a) of the Act;

27.2. The Respondent’s registration with the Applicant as a debt counsellor is cancelled with immediate effect in terms of section 150(g) of the Act.

27.3. The Respondent is ordered -

27.3.1. To refund all past and current consumers all amounts taken from consumers in excess of the regulated fee of R50.00. The refund shall be paid to each consumer within thirty (30) days of the date of this order. Respondent is ordered to submit a report to the Applicant within 60 days of the date of this order. The report shall detail:-

(i) the amount of all repayments made by the Respondent;

(ii) the recipients of all repayments; and

(iii) the steps taken by the Respondent to locate consumers that she was unable to trace.

27.3.2 To refund all monies charged to Mr Khoza and to submit written proof of payment to the Applicant by 28 February 2013 in terms of section 150(h) of the Act.

27.3.3. To provide all her files to the Applicant by no later than 31 January 2013, in terms of section 150(g) of the Act.

DATED AT CENTURION THIS 18th DAY OF JANUARY 2013.

[signed]

_______

D TERBLANCHE

PRESIDING MEMBER

MS PENELOPE BACK (MEMBER) AND MR X MAY (MEMBER) CONCURRING

1 NCT/23/2008/57(1(P)

2 National Consumer Regulator v Ferreira (NCT/166/2008/57 (1)(P)) [2010] ZANCT 51