IN THE NATIONAL CONSUMER TRIBUNAL HELD IN CENTURION NATIONAL CREDIT REGULATOR

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1 IN THE NATIONAL CONSUMER TRIBUNAL HELD IN CENTURION In the matter between: Case number: NATIONAL CREDIT REGULATOR APPLICANT and JOY VICTORIA MINNIES MARK MINNIES NADEEM WILLIAMS 1 ST RESPONDENT 2 ND RESPONDENT 3 RD RESPONDENT Coram: Prof. B. Dumisa Presiding member Mr. X. May Member Adv. J. Simpson Member Date of Hearing 15 August 2016, 19 September 2016 and 13 October 2016 JUDGMENT AND REASONS APPLICANT 1. The Applicant in this matter is the National Credit Regulator ( NCR ), a juristic person established by section 12 of the National Credit Act 34 of 2005 ( the Act or NCA ). At the hearing the NCR was represented by its Acting Senior Legal Advisor, Ms C. Young.

2 RESPONDENTS 2. The 1 st Respondent is Mrs Joy Minnies ( Mrs Minnies ) a major female registered as a debt counsellor with the NCR residing in Cape Town. 3. The 2 nd Respondent is Mr Mark Minnies ( Mr Minnies ) a major male residing in Cape Town and the husband of Mrs Minnies. 4. Both the 1 st and 2 nd Respondents were represented by an attorney, Ms Erasmus. 5. The 3 rd Respondent is Mr. Nadeem Williams ( Mr. Williams ) a major male registered as a debt counsellor with the NCR. Mr Williams was represented by an attorney, Mr Munro. APPLICATION TYPE 6. This is an application in terms of Section 57(1) of the NCA. The NCR is applying for the deregistration of the 1 st and 3 rd Respondents as debt counsellors due to repeated prohibited conduct. 7. The hearings were conducted at the offices of the Tribunal with the Respondents all appearing via Skype audio and video transmission. EVENTS LEADING TO THE PRESENT APPLICATION 8. This matter has a long history. In summary, during January 2011 Ms Denise Paulse ( Ms Paulse) applied to a debt counselling firm called Credit Matters to be placed under debt review. After being placed under debt review she was contacted by one of the employees of Credit Matters, Mrs Minnies, in May Mrs Minnies told her that she was starting her own debt counselling firm and asked whether she would want to move with her. Ms Paulse agreed and her account as such was transferred to the new firm called Debt Quest. After some months Ms Paulse starting receiving calls and letters from her creditors saying that she was no longer under debt review Page 2 of 23

3 and they intended taking legal action against her for the outstanding amounts on her loans. After unsuccessfully trying to resolve the problem with Debt Quest, Ms Paulse decided to sell her property and settle her debts on her own. In 2012 Ms Paulse lodged an application with the Tribunal in terms of Section 141(1)(b) of the NCA. It appears Ms Paulse was asking the Tribunal to make an award of damages against Debt Quest for the loss she suffered due to the negligence of Debt Quest. 9. The matter was heard by the Tribunal and it issued a judgment in August 2013 ordering the NCR to investigate the matter and report back to the Tribunal. 10. The NCR did the investigation as ordered which has then resulted in the present application by the NCR for the de-registration of the First and Second Respondents. POINTS RAISED IN LIMINE First point in limine 11. Mr Williams raised two points in limine in his answering affidavit. At the hearing Mr Munro, his legal representative elected to only raise the one point. Mr Munro submitted that any information provided by his client, Mr Williams, was not admissible as evidence before the Tribunal as Mr Williams had never been warned of his right not to incriminate himself in accordance with section 139(4) of the NCA. Had Mr Williams been made aware of the fact that he was being investigated he would have contacted his lawyers in the same building where he was and would not have provided the information that he did. 12. In response, the NCR called Mr Mark Whale to testify. Mr Whale was a senior inspector with the NCR at the time. He stated that he contacted Mr Williams during October 2013 and requested to meet with him regarding an investigation of Ms Paulse s complaint. Mr Williams agreed. They met at Mr Williams offices in Cape Town. Mr Williams was known to Mr Whale as Mr Williams had been an investigator with the NCR previously before becoming a debt counsellor. At the meeting, Mr Roger Brown, an attorney, and Mr Ardiel Theunissen, an advocate, were also Page 3 of 23

4 present with Mr Williams. He informed them of the purpose of the investigation and produced his certificate appointing him as investigator. He told Mr Williams that he did not have to supply any information to him. He could also provide an affidavit through his attorney if he wished. Mr Williams stated that he preferred to provide an affidavit through his attorney. Mr Whale asked Mr Williams whether he would provide information regarding Mr Minnies. Mr Williams declined to do so. Approximately two days later Mr Whale collected an affidavit by Mr Williams from the law offices of Roger Brown. 13. Mr Munro cross-examined Mr Whale. Mr Munro asked a number of questions but did not make any specific submissions to Mr Whale. 14. Mr Munro then called Mr Roger Michael Brown to testify. Mr Brown confirmed that he was at the meeting that took place. He was told by Mr Williams that Mr Whale would be meeting with him and as he knew Mr Whale well, he wanted to see him. In summary, Mr Brown implied that he was merely present to see Mr Whale as an acquaintance, not as an attorney. He expressed his extreme dismay at the actions of Mr Whale. In his view Mr Whale mislead them into believing that the meeting was simply to gather information relating to Mr and Mrs Minnies but in fact Mr Whale was specifically investigating Mr Williams. 15. Mr Brown stated in his testimony that there are two separate certificates appointing inspectors for this investigation. The certificates however have different dates. The one certificate is to investigate Mr Minnies and the other Mr Williams. Mr Munro argued that this aspect was relevant to which certificate Mr Whale produced at the meeting. In his view Mr Williams was not provided with a certificate indicating that he was being investigated. 16. The main question that the Tribunal must answer regarding the point in limine is whether Mr Williams was warned of his right not to incriminate himself, as per the requirement in section 139(4) of the NCA. Mr Whale testified that he did warn Mr Williams of this right. The Respondents did not deny this or make any submissions to the contrary. Mr Whale further testified that he collected the affidavit from the offices of Mr William s attorney, Mr Brown. While Page 4 of 23

5 Mr Brown appeared to be very uncertain as to whether or not he in fact assisted Mr Williams in drafting this affidavit, he did not deny it. The fact that Mr Williams chose to provide an affidavit on oath in writing through the office of his attorney is in any event further corroboration to show that Mr Whale did explain his rights to him and he was aware of his right. 17. There are three appointment certificates for Mr Whale that form part of the record for this matter. The two certificates to investigate Mr and Mrs Minnies are both dated 5 September 2013 and the one for Mr Williams is dated 30 September The meeting that took place between the parties took place in October 2013, after the date of the certificates. The difference in the dates on the certificates do not influence or affect the question as to whether or not Mr Whale warned Mr Williams of his rights. 18. The Tribunal finds that Mr Williams was warned of his right not to incriminate himself and his evidence in this regard forms part of the record. The first point in limine raised is dismissed. Second point in Limine 19. Although Mr Munro chose not to raise the second point in limine at the hearing, he did not withdraw the point. Therefore it will be dealt with very shortly. Mr Williams essentially submitted in his affidavit that the NCR did not serve the application properly on Mr Williams in accordance with Rule 30 and therefore the NCT Registrar should have issued a Notice of incomplete filing to the NCR in that respect. Mr Williams does however concede in his affidavit that he did receive the application and all the relevant documents in due course. 20. In this regard the Tribunal finds that Mr Williams did receive the Application and was in a position to defend the application against him and further did indeed do so by filing an answering affidavit. Whether or not the application was properly served in accordance with the Rules has been rendered moot. Page 5 of 23

6 21. The second point in limine is therefore also dismissed. EVIDENCE SUBMITTED BY THE NCR 22. The NCR s allegations and the orders prayed for against the Respondents, can be summarised as follows Mrs. Minnies For the period January 2011 to March 2011 Contravening section 44(2) of the NCA by engaging in the services of a debt counsellor without being registered. Contravening section 86(4)(b) read with Regulation 24(5) by failing to retain proof of transmission of form Contravening section 86(7)(c) of the NCA by failing to refer matters to court Mr. Minnies Contravening section 44(2) of the NCA by engaging in the services of a debt counsellor without being registered. Mr Williams For the period January 2011 to March 2011 Contravening section 44(2) by engaging in the services of a debt counsellor without being registered and failing to comply with his conditions of registration. During the hearing the NCR clarified this allegation by stating that Mr Williams was guilty of allowing other parties to use his signature, name and registration number to process debt review applications. 23. The NCR is asking the Tribunal to find that the Respondents engaged in prohibited conduct and to make the following orders Cancelling the registration of Mrs Minnies as a debt counsellor Page 6 of 23

7 Ordering the Respondents to surrender all their client files to the NCR and to furnish a list of all present and past clients. This must take place within 20 days. Imposing an administrative fine on all the Respondents Issuing of a certificate to Ms Paulse in terms of section 164(3)(b) of the NCA allowing her to claim damages in the High court. Making any other appropriate order in terms of section 150(i) of the NCA. 24. The NCR called Mr Mark Whale to testify. In summary, Mr Whale was appointed in September 2013 to investigate the matter. The investigation resulted from the order the Tribunal made in the case involving Ms Paulse. Mr and Mrs Minnies were working at a debt counselling firm called Credit Matters in January 2011 when Ms Paulse applied for debt review. The office was located at Suite 4, Capital Corner, Church Street, Wynberg, Cape Town. They were not registered as debt counsellors at that time. They informed Mr Whale that they were working as a franchise of Mr Williams and were using the registration number of Mr Williams to conduct their business. Ms Paulse was provided with a letter from Credit Matters stating that her application for debt review was successful. The letter was signed by a debt counsellor called MA Theunissen with registration number NCRDC 20. Ms Paulse had an account with Cape Consumer which had already been handed over for collection. This account could not fall under debt review and should have been excluded. Mr and Mrs Minnies sent 7 Form 17.1 forms to various credit providers on 5 January 2011 on behalf of Ms Paulse. These forms had the electronic signature of Mr Williams (the 3rd Respondent) as the debt counsellor on them. The forms advised the individual creditors that Ms Paulse had successfully applied for debt review. On 30 March 2011 Mrs Minnies was registered as a debt counsellor and started her own business called Debt Quest on 1 April During May 2011 Mrs Minnies asked Ms Paulse to move her account to Debt Quest, which she agreed to. 25. As a consequence of Ms Paulse transferring her account to Debt Quest - On 23 June 2011, Credit matters mistakenly issued a form 17.4 to all Ms Paulse s creditors. The notice was headed Withdrawal of application for debt review. The body of the form states This notice serves to advise you that the application for debt counselling dated 2011/01/05 has been voluntarily withdrawn by the customer. Credit matters then tried to correct this error by sending an to all the creditors on 19 July 2011 stating that Kindly be advised that the client was transferred to NCRDC 1999 and not withdrawn. This registration number is that of Mrs Minnies. However, Page 7 of 23

8 some of the creditors, such as Nedbank, had already acted on the notice of withdrawal received and had taken legal steps to claim the debt from Mrs Paulse. FNB also commenced legal action against Ms Paulse. It appeared FNB had never received the correcting the error made. Although the NCA does not provide for a process whereby a client s debt review process can be transferred to a new debt counsellor, in practice, the debt counsellors use what is known as a form 17.4, to advise credit providers of a transfer. 26. On 20 September 2011 Mrs Minnies referred Ms Paulse s matter to the Magistrates court for an order to be made but no order appears to have been made. Ms Paulse eventually decided to cancel her debt review and sent an in this regard on 1 July 2012 to Mrs Minnies. Ms Paulse subsequently sold her house and settled all her own debts without using the debt review process. 27. In terms of the NCA the debt counsellor has 60 days within which to finalise the debt review process or the credit providers can terminate the process and take legal action. Ms Paulse s review process was not finalised within this time and therefore the credit providers were at liberty to proceed with legal action. 28. Ms Erasmus, on behalf of Mr and Mrs Minnies, put it to Mr Whale that Mrs Minnies was instrumental in ensuring that Nedbank withdrew the legal action against Ms Paulse. She corresponded with them on an ongoing basis until they withdrew their summons and engaged in the debt counselling process. 29. Mr Munro, on behalf of Mr Williams, put it to Mr Whale that there was no franchise agreement between the parties. To corroborate this, there is no proof of any written agreement in this regard and no evidence as to any terms and conditions relating to this so called agreement. He submitted that Ms Paulse did not clearly understand that Mr Minnies was simply a representative of Credit matters, he did not present himself as a registered debt counsellor. There was nothing in the NCA which prevented a representative of a debt counsellor from performing the administrative duties of a debt counsellor. Mr Monroe put it to Mr Whale that an error was made Page 8 of 23

9 by advising the credit providers that Ms Paulse had withdrawn from the debt review process but adequate steps were taken to correct this error. He finally submitted that there was a registered debt counsellor present on the premises at all times when Mr and Mrs Minnies worked at Credit Matters. 30. Ms Joy Minnies gave evidence on oath. She joined the Wynberg branch of Credit matters in She performed general administrative duties in the office. She never acted as a debt counsellor. A lady by the name of Tracy Hanson was the registered debt counsellor who was on the premises at all times. When Nedbank advised that they were proceeding with legal action against Ms Paulse she interacted with them and succeeded in ensuring that they stopped the legal action. She would input information into the Credit Matters system and it would automatically process it and issue the application to the credit providers. When customers walked into the branch they would speak to a debt counsellor. Mark Minnies was a consultant. She denied being Ms Paulse s debt counsellor in January 2011 when she applied for debt counselling but she did take the documents Ms Paulse handed in and she entered the information on the system. 31. Mr Mark Minnies gave evidence on oath. He confirmed that he was not a registered debt counsellor. He could not register as a debt counsellor as he has a judgment recorded against him by Standard Bank. He was involved in the marketing side of the Credit Matters business. He did not introduce himself as a debt counsellor to Ms Paulse. She did not ask him whether he was a debt counsellor or not. He assisted her with the necessary documents by telling her what was required. He explained to her what would happen at the branch. He was paid a portion of the fee that the client would pay for debt counselling. All the documents and information he obtains from a client is sent to the Credit Matters head office and it is processed from there. If he sees a client then he introduces the client to the debt counsellor on the premises. He introduced Ms Menicia Dominick, a registered debt counsellor to Ms Paulse. His answering affidavit confirms that he and his wife started the Wynberg branch of Credit Matters in 2009 on a fee sharing arrangement with Mr Williams. He was the manager of the branch. He did a course on debt counselling although he is not a registered debt counsellor. Page 9 of 23

10 32. Ms Dominick also filed a supporting affidavit stating that she was the registered debt counsellor at the Wynberg Branch from 11 November 201 until March 2011 when she left to pursue her own career as a debt counsellor. 33. Mr Nadeem Williams gave evidence on oath. He has been a debt counsellor since He did not have any franchise agreement with Mr and Mrs Minnies. He permitted them to use his Debt Counselling registration number for certain administrative aspects of the process but not to act as debt counsellors. The Wynberg branch was required to always have a registered debt counsellor on the premises. The Wynberg branch was subsequently closed down. Mr Theunissen was not present at the Wynberg branch on 5 January They would use the registration number of the debt counsellor present at the branch for all applications. However it became a problem when debt counsellors left the branch. They then decided to use Mr William s own registration number for all the documents although he would not physically be present at the branch. In his view it could not have been the intention of the NCA or the NCR that a debt counsellor had to perform all the administrative duties required in a debt review process as it would essentially be impossible. His affidavit provided to Mr Whale states that there was a period during 2010 when there was no debt counsellor at the Wynberg branch. Mr and Ms Minnies ran the Wynberg branch on their own. 34. The Tribunal called Ms Paulse as a witness in the matter. Ms Catherine Denise Dawn Paulse testified via conference call from Cape Town. She found herself in financial difficulties and decided to apply for debt review. She phoned the Wynberg branch of Credit Matters and arranged with the receptionist for an appointment for 10h00 the next day. The next day she met with Mr Mark Minnies, the 1 st Respondent. He explained the entire process to her and the documents required. She did not speak to anyone else at any stage. Mr Minnies introduced himself to her as a debt counsellor. He told her that the fee for debt review would be R and her monthly repayment on all her debts would be R4500. She started paying the R4500 from April Months later she agreed that Ms Minnies could transfer her account to her new debt counselling firm. This was the first time she met Mrs Minnies. She paid the R3500 the same day of the appointment, on 5 January Some months after being placed under debt review she started receiving calls from her creditors saying that she was no longer under debt review. Despite repeated calls to Mr and Mrs Minnies she was unable to resolve the problem. She Page 10 of 23

11 eventually decided to terminate her debt review and settle her debts herself. Mr and Mrs Minnies did not assist her and did not communicate with her. She was not kept informed of what was happening with her debt review process and the problems were never resolved. During cross examination Ms Paulse conceded that at that stage she did not know the difference between a debt counsellor and a representative. Neither legal representative made any submission to Ms Paulse that she was introduced to Ms Dominic or any other debt counsellor at any stage. ASSESSMENT OF THE EVIDENCE 35. There are a number of aspects regarding this matter which do not appear to be in dispute. The following are common cause At the time when Ms Paulse met with Mr Minnies at Credit Matters in January 2011 he was not a registered debt counsellor. At no stage did Mr Minnies specifically inform Ms Paulse that he was not a registered debt counsellor. The names and registration numbers of the various debt counsellors appearing on all Ms Paulse s debt review documents were not physically present or employed at the Wynberg branch when she applied for debt review. Ms Paulse only met Mrs Minnies the first time when Mrs Minnies started her own debt counselling firm and asked Ms Paulse whether she could transfer her account to her new firm. Mr and Mrs Minnies managed and ran the Wynberg branch for a period from 2009 until 2011 when the branch was closed down and Ms Minnies started her own debt counselling firm. 60 days after Ms Paulse applied for debt review there was still no order from the Magistrates court or the Tribunal finally confirming her status under debt review. In terms of section 86(10) of the NCA her creditors were therefore entitled to proceed with enforcement of the default debts against her. Page 11 of 23

12 On 23 June 2011 Credit Matters mistakenly issued a letter to all Ms Paulse s creditors stating that she had voluntarily cancelled her debt review application. This caused certain creditors to contact Ms Paulse and initiate steps to collect the debt. Although Credit Matters issued a new letter by on 19 July 2011 correcting and clarifying the mistaken letter, certain creditors, such as FNB and Nedbank still pursued legal action against Ms Paulse. Up until Ms Paulse terminated the mandate with Debt Quest in 2012, there was still no order granted by the Magistrate s Court or Tribunal. Ms Paulse eventually had to sell her property so that she could settle her debts and rescue her financial situation. 36. The following aspects appear to be in dispute Did Mr Minnies perform the duties of a registered debt counsellor or hold himself out to be a registered debt counsellor? Did Mrs Minnies perform the duties of a registered debt counsellor while not being registered? Did Mrs Minnies perform her duties as a debt counsellor in accordance with the NCA or contravene he conditions of registration? Did Mr Williams perform the duties of a debt counsellor while not being registered. More specifically does allowing other parties to use his signature, name and registration number constitute a contravention of the NCA? Did Mr Williams fail to comply with his conditions of registration? 37. Mr Minnies testified that a debt counsellor was present at the Wynberg branch of Credit Matters where he worked and assisted Ms Paulse. He stated that he introduced Ms Paulse to the debt counsellor. Mr Paulse however testified that she only met with Mr Minnies and he told her he was the debt counsellor. During cross examination it was never put to Ms Paulse that she was introduced to any debt counsellor. Mr Minnies conceded that he never told Ms Paulse that he was not a registered debt counsellor. Ms Paulse testified well. There is nothing to suggest that she could have met a debt counsellor but forgot about it or simply lied. There is no evidence to Page 12 of 23

13 support Mr Minnie s evidence that Ms Paulse was introduced to a debt counsellor. None of the documents relating to Ms Paulse s debt review contains the name of Ms Dominick. Based on the evidence presented the Tribunal is satisfied that only Mr Minnies assisted Ms Paulse throughout the debt review process and engaged with Ms Paulse as a debt counsellor. At the very least he reasonably would have known that Ms Paulse was under the mistaken impression that he was a registered debt counsellor and did nothing to correct this impression. The extent to which he assisted her clearly went far beyond simple administrative duties, he received the application, explained every aspect of the process, the requirements and the consequences, instructed Ms Paulse which documents she needs to obtain. This entire process constituted all the duties which a debt counsellor would be expected to perform. There is no evidence of any interaction or assessment done of Ms Paulse s debt review application by a registered debt counsellor. 38. The evidence is clear that Ms Minnies worked at the Wynberg branch with her husband since 2009 until the branch closed in There is no evidence to support the affidavit by Ms Dominick that she was present at the branch throughout this period and actively managed the debt review process. Based on the totality of the evidence presented it appears far more probable that Mr and Mrs Minnies actively managed and ran the branch on their own. At most Ms Dominick appears to have been present purely to justify the debt counselling process being followed at the branch if necessary. Mr and Mrs Minnies therefore must have held meetings with consumers, advised them and processed all their applications. These are all duties which a registered debt counsellor is expected to do. They go far beyond mere administrative duties. The conclusion is inescapable that Mrs Minnies therefore acted as a debt counsellor while not being registered to do so. 39. After Mrs Minnies registered as a debt counsellor on 1 April 2011, she operated her own firm called Debt Quest. This was already almost 4 months after Ms Paulse applied for debt review. The process reasonably should have been completed within 60 days so as to prevent the creditors from initiating legal action against Ms Paulse. From 1 April 2011, until 2012, when Ms Paulse cancelled the mandate with Mrs Minnies, the process had still not been completed and Ms Paulse was still subjected to numerous problems with her debt review process. Although there may have been numerous facts which contributed to the delay, it is clear that Ms Paulse was not kept adequately informed of the process and the steps taken by Mrs Minnies were not Page 13 of 23

14 sufficient to ensure that the process was properly finalised. While Mrs Minnies may have interacted with Nedbank to ensure that the summons at that stage was not acted on, this single action did not adequately resolve the problem as a whole. The Tribunal therefore finds that Mrs Minnies did not perform her duties as a debt counsellor reasonably in accordance with the NCA. 40. Although the name and registration number of Mr Williams appears on numerous documents relating to Ms Paulse s debt review process, in particular the Form 17.1 which notifies all the creditors of the debt review application, the evidence is clear that Mr Williams was not present at the Wynberg branch and there is no evidence that he was even aware of Ms Paulse s debt review application. From the evidence it is clear that he permitted the Wynberg branch to use his electronic signature, name and registration number for the purposes of processing applications, even if he was not present or even aware of the application. While he may or may not have had access to the firm s debt counselling system, visited the branch at times or been aware of certain applications at any given stage the fact remains that the Wynberg branch was able to receive and process debt review applications in his name without any personal intervention by him whatsoever and he was well aware of this state of affairs. THE APPLICABLE LAW 41. Section 44(2) of the NCA states (2) A person must not offer or engage in the services of a debt counsellor in terms of this Act, or hold themselves out to the public as being authorised to offer any such service, unless that person is registered as such in terms of this Chapter. 42. Section 52 (5) of the NCA states the following 52. Certificate, validity and public notice of registration. (5) A registrant must (c) comply with its conditions of registration and the provisions of this Act; 43. The conditions of registration applicable to Mrs Minnies and Mr Williams states the following Page 14 of 23

15 A. General Conditions 1. The Debt Counsellor must comply with all legislation application to the operation of the business of a Debt Counsellor, including but not limited to the Act, the Regulations and any subsequent amendment or substitution of the applicable legislation and regulations. 2. The Debt Counsellor must perform debt counselling in a manner that is consistent with the purpose and requirements of the Act. The Debt Counsellor must in all instances act professionally and reasonably in providing debt counselling services to consumers and provide such services in a manner that is timely, fair and non-discriminatory and does not bring the NCR or debt counselling into disrepute. 3. Upon application for debt review and throughout different stages of the process of application for debt review, the Debt Counsellor must fully inform the consumer of the consequences for the consumer of applying for debt review and of the consequences of an order for debt re-arrangement being made. 4. The Debt Counsellor must comply with the requirements specified by the NCR in a respect of registering consumer who apply for debt review, on the specified database. The Debt Counsellor must update such consumer record with the status of the review and postreview performance, from time to time. 5. The Debt Counsellor must not engage in any activity which could be in conflict with the interest of the consumers to whom debt counselling services are provided, or which may lead to such conflict. The Debt Counsellor should not enter into any agreements or engage in any activity which may prevent him or her from acting in the best interest of the consumer to whom debt counselling services are provided. Page 15 of 23

16 44. Section 86 of the NCA 1 contains various references to the duties of a debt counsellor. 86. Application for debt review. (1) A consumer may apply to a debt counsellor in the prescribed manner and form to have the consumer declared overindebted. (2) An application in terms of this section may not be made in respect of, and does not apply to, a particular credit agreement if, at the time of that application, the credit provider under that credit agreement has proceeded to take the steps contemplated in section 130 to enforce that agreement. [Subs.(2) substituted by s. 26 (a) of Act No. 19 of 2014.] (3) 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 subsection (1); and (b) may not require or accept a fee from a credit provider in respect of an application in terms of this section. (4) On receipt of an application in terms of subsection (1), a debt counsellor must (a) provide the consumer with proof of receipt of the application; (b) notify, in the prescribed manner and form (i) all credit providers that are listed in the application; and (ii) every registered credit bureau. (5) A consumer who applies to a debt counsellor, and each credit provider contemplated in subsection (4) (b), must (a) comply with any reasonable requests by the debt counsellor to facilitate the evaluation of the consumer s state of indebtedness and the prospects for responsible debt rearrangement; and (b) participate in good faith in the review and in any negotiations designed to result in responsible debt rearrangement. (6) A debt counsellor who has accepted an application in terms of this section must determine, in the prescribed manner and within the prescribed time (a) whether the consumer appears to be overindebted; and 1 Although the amended NCA is reflected here - the duties of a debt counsellors remain materially the same as they were in 2011 at the time when the prohibited conduct occurred Page 16 of 23

17 (b) if the consumer seeks a declaration of reckless credit, whether any of the consumer s credit agreements appear to be reckless. (7) If, as a result of an assessment conducted in terms of subsection (6), a debt counsellor reasonably concludes that (a) the consumer is not overindebted, the debt counsellor must reject the application, even if the debt counsellor has concluded that a particular credit agreement was reckless at the time it was entered into; (b) the consumer is not overindebted, but is nevertheless experiencing, or likely to experience, difficulty satisfying all the consumer s obligations under credit agreements in a timely manner, the debt counsellor may recommend that the consumer and the respective credit providers voluntarily consider and agree on a plan of debt rearrangement; or (c) the consumer is overindebted, the debt counsellor may issue a proposal recommending that the Magistrate s Court make either or both of the following orders (i) that one or more of the consumer s credit agreements be declared to be reckless credit, if the debt counsellor has concluded that those agreements appear to be reckless; and (ii) that one or more of the consumer s obligations be rearranged by (aa) extending the period of the agreement and reducing the amount of each payment due accordingly; (bb) postponing during a specified period the dates on which payments are due under the agreement; (cc) extending the period of the agreement and postponing during a specified period the dates on which payments are due under the agreement; or (dd) recalculating the consumer s obligations because of contraventions of Part A or B of Chapter 5, or Part A of Chapter 6. (8) If a debt counsellor makes a recommendation in terms of subsection (7) (b) and (a) the consumer and each credit provider concerned accept that proposal, the debt counsellor must record the proposal in the form of an order, and if it is consented to by Page 17 of 23

18 the consumer and each credit provider concerned, file it as a consent order in terms of section 138; or (b) if paragraph (a) does not apply, the debt counsellor must refer the matter to the Magistrate s Court with the recommendation. (9) If a debt counsellor rejects an application as contemplated in subsection (7) (a), the consumer, with leave of the Magistrate s Court, may apply directly to the Magistrate s Court, in the prescribed manner and form, for an order contemplated in subsection (7) (c). (10) (a) If a consumer is in default under a credit agreement that is being reviewed in terms of this section, the credit provider in respect of that credit agreement may, at any time at least 60 business days after the date on which the consumer applied for the debt review, give notice to terminate the review in the prescribed manner to (i) the consumer; (ii) the debt counsellor; and (iii) the National Credit Regulator; and (b) No credit provider may terminate an application for debt review lodged in terms of this Act, if such application for review has already been filed in a court or in the Tribunal. [Subs. (10) substituted by s. 26 (b) of Act No. 19 of 2014.] 45. It is very clear from a plain reading of the section and the general conditions that the NCA envisages a debt counsellor being actively involved and participating in every aspect of the debt review process. While it stands to reason that simple administrative duties such as the receiving or filing of a document need not necessarily be performed by a debt counsellor, a debt counsellor must be actively involved in the entire process. Although it is impractical to attempt to list duties which may be classified as administrative in nature, it was most certainly not the intention of the NCA that administrative staff could perform every material aspect of the debt review process such as interacting with new applicants, advising them on the documents they need to provide and the consequences of debt review. A consumer expects to be assisted and advised by a registered debt counsellor throughout the process. 46. The situation would be analogous to a consumer who interacts with their insurance advisor who is properly registered to provide advice on certain insurance products. The consumer would Page 18 of 23

19 expect to deal with their registered insurance advisor initially and on an ongoing basis thereafter. While they may on occasion send or receive documents from an administrative person in the advisor s office, they would at all times expect to deal with their advisor directly and that their advisor would be actively involved in the entire process at all times. It is further irrelevant that the information relating to the debt counselling process is highly automated. A consumer is entitled to expect that he or she is dealing directly with a registered debt counsellor at all times and that the entire process is carefully and diligently overseen by that registered debt counsellor. The consumer must further never be left in any doubt as to whether or not the person they are interacting with is a debt counsellor or not. 47. It is therefore clear from the evidence presented in this matter that Mr and Mrs Minnies performed the duties and responsibilities of a debt counsellor while not being registered to do so. 48. The allegation against Mr Williams is that he acted as a debt counsellor while he was not registered to do so. Factually, Mr Williams was and always been registered as a debt counsellor from The NCR has argued that Mr Williams contravened this section by allowing Mr and Mrs Minnies to perform the duties of debt counsellors while not being registered to do so. While the NCR s attempt to have his actions fall within the definition of section 44(2) of the NCA is noted, the argument is not convincing. There is no practical or logical manner in which one can stretch the purpose of section 44(2) of the NCA to include this type of interpretation. 49. The NCR has however also alleged that Mr Williams contravened the NCA in that he breached his conditions of registration. As noted above, a debt counsellor is expected to.. perform debt counselling in a manner that is consistent with the purpose and requirements of the Act. The Debt Counsellor must in all instances act professionally and reasonably in providing debt counselling services to consumers and provide such services in a manner that is timely, fair and non-discriminatory and does not bring the NCR or debt counselling into disrepute. 50. By allowing Mr and Minnies to manage and run the Wynberg branch with minimal or no clear supervision by a registered debt counsellor Mr Williams most certainly created a situation Page 19 of 23

20 whereby consumers could potentially receive unprofessional services and could bring the debt counselling industry as a whole into disrepute. No debt counsellor may simply provide his electronic signature, name and registration number to be utilised without him or her being personally involved in every material step of that specific debt review application. CONCLUSION IN RESPECT OF THE CONTRAVENTIONS 51. The Tribunal therefore finds the following The First and Second Respondents, are guilty of prohibited conduct by engaging in the services of a debt counsellors without being registered. The Third Respondent, Mr Williams, is guilty of prohibited conduct by failing to comply with his conditions of registration. CONSIDERATION OF THE APPROPRIATE PENALTY 52. The NCR has requested the Tribunal to order that Mrs Minnies and Mr Williams be deregistered as debt counsellors. 53. The Tribunal is well aware of the dire consequences of deregistration for the Respondents and will therefore not make such an order lightly. 54. The factors that can be considered in these circumstances are in many ways similar to the factors the Tribunal must consider when imposing an administrative fine in terms of section 151(3) of the NCA (3) When determining an appropriate fine, the Tribunal must consider the following factors: (a) The nature, duration, gravity and extent of the contravention; (b) any loss or damage suffered as a result of the contravention; (c) the behaviour of the respondent; Page 20 of 23

21 (d) the market circumstances in which the contravention took place; (e) the level of profit derived from the contravention; Judgment and Reasons (f) the degree to which the respondent has cooperated with the National Credit Regulator, or the National Consumer Commission, in the case of a matter arising in terms of the Consumer Protection Act, 2008, and the Tribunal; and (g) whether the respondent has previously been found in contravention of this Act, or the Consumer Protection Act, 2008, as the case may be. 55. The NCR did not deny that Mr Williams closed down the Wynberg branch of Credit Matters and other branches which operated in this manner. The incidents complained of took place in early At that stage the debt counselling was in its infancy and there was little guidance in respect of certain aspects of debt counselling. Based on the evidence presented only Ms Paulse lodged a complaint in respect of the Respondents and their actions. There is no evidence of further complaints being lodged. Although the consequences of the mistakes made by the Respondents in Ms Paulse s case were certainly severe, it fortunately appears that no other consumers were affected at that time. Mr Williams has been a debt counsellor since 2007 and Mrs Minnies since There is no evidence of subsequent judgments issued by the Tribunal against them. 56. In the specific circumstances of this matter the Tribunal does not regard it as appropriate that their registration as debt counsellors be cancelled. 57. Despite the Tribunal s view that deregistration is not warranted, this must not be seen in any way as condoning the Respondent s actions or minimising the seriousness of their prohibited conduct. To allow unregistered persons to perform the duties of debt counsellors would lead to very severe consequences for consumers and the industry as a whole. A strong message must be sent that this form of prohibited conduct will be severely punished. 58. The Tribunal must also send out a strong message that debt counsellors are expected to render a specific and personal service to consumers in accordance with the NCA. As stated previously, debt counsellors may not allow others to simply use their credentials for the purposes of debt review. Page 21 of 23

22 59. In the matter of NCR v Bonney Tebogo Dioka 2 the Tribunal held that the remote management of a debt counselling business by Dioka who is employed in another province is frowned upon by the Tribunal and is viewed by the Tribunal as an aggravating factor. 60. Section 151 of the NCA allows the Tribunal to impose an administrative fine that does not exceed the greater of 10 per cent of the respondent s annual turnover during the preceding financial year; or R The NCR did not provide any evidence as to the annual turnover of the First and Third Respondents. The personal circumstances of Mr Minnies are also unknown to the Tribunal. 62. While the Tribunal can still impose a fine of R under these circumstances, on each Respondent, it can impose a lesser fine if warranted. The fine must deter others from committing the same prohibited conduct, it must further punish the offender but also not exceed the realistic amount that the offender can pay, as this would result in an injustice. 63. The Tribunal can further state that Ms Paulse is entitled to apply to the Chairperson of the Tribunal for a certificate in terms of section 164(3) of the NCA to proceed with a civil claim for damages in the High Court. ORDER 64. Accordingly, the Tribunal makes the following order: 64.1 The First Respondent, Mrs J Minnies, is to pay an administrative fine of R NCT/7750/2012/57(1)(P)NCA Page 22 of 23

23 64.2 The Second Respondent, Mr Mark Minnies, is to pay an administrative fine of R The Third Respondent, Mr N Williams, is to pay an administrative fine of R There is no order as to costs. DATED ON THIS 13 th DAY OF DECEMBER 2016 [signed] Adv J Simpson Member Prof. B Dumisa (Presiding member) and Mr. X May (member) concurring. Page 23 of 23