ADRA STRATEGY APRIL 2013 The voice of the Debt Collection Industry in South Africa
Table of Contents 1 Overview... 3 1.1 Background... 3 1.2 Who are ADRA s stakeholders... 3 2 What environment is ADRA operating in?... 4 2.1 SWOT Analysis (Opportunities & Threats)... 4 3 Who is ADRA... 5 3.1 Mission Statement... 5 3.2 Values... 6 4 Where is ADRA now?... 7 4.1 SWOT Analysis (Strengths & Weaknesses)... 7 4.2 Market Analysis... 8 5 Where does ADRA want to go?... 9 5.1 Vision Statement... 9 5.2 Positioning statement... 10 6 How is ADRA going to get there?... 12 6.1 Strategic Thrusts... 12 ADRA Strategy Document Page 2 of 15
1 Overview 1.1 Background The debt recovery industry in South Africa is regulated through: - the Council for Debt Collectors in terms of the Debt Collectors Act regarding debt collection practitioners, including property managers; - the National Credit Regulator in terms of credit providers; and - the Law Society of South Africa and its constituent members. The Association of Debt Recovery Agents ( ADRA ) is a voluntary national association servicing its members who are involved in the debt recovery industry. ADRA was formed in 1988 and is a non-profit company. 1.2 Who are ADRA s stakeholders - Debt collection practitioners, whether sole proprietors or corporate entities, whether debt collectors, attorneys or property managers, hereafter referred to as the members. - Credit providers who as part of their own businesses make use of debt collection practitioners and / or collect their own debt in a separate unit. - Regulatory bodies, government, policy makers and other representative bodies to the extent that there is impact on the debt recovery industry. - Consumers, whether natural persons or businesses, who are indebted to credit providers i.e. the public at large. - Service providers to the debt recovery industry and in particular to debt collection practitioners. ADRA Strategy Document Page 3 of 15
2 What environment is ADRA operating in? 2.1 SWOT Analysis (Opportunities & Threats) Opportunities Threats - ADRA can expand beyond South Africa into Southern Africa or Africa. - Establish links with local associations that function within the same commercial and / or regulatory environment, such as the Estate Agency Affairs Board, the Institute for Credit Management, the Payment System Stakeholder Forum, The Credit Providers Association, etc. - Establish links to international associations that perform similar functions, such as the ACA in the USA and the CSA in the United Kingdom. - Facilitate and host seminars and events that bring together members and stakeholders in the debt recovery industry. - Assist in development of SME sector and thereby the South African economy as a whole by advising members with new and / or small to medium enterprises. - Membership numbers can decrease substantially in economic downturns effecting negatively on the day to day operations of the association. The association needs a large membership base to continue with its operations. - Membership could decrease if there is insufficient value associated with being a member, resulting in a fragmented industry that cannot engage with stakeholders in a meaningful manner. - While there are currently no direct competitors, there are other organisations that may solicit members and prospects or alternatively another body could be formed purporting to represent the debt recovery industry. - Not being recognised by regulatory bodies as contributing to the credit cycle and as a result being excluded from consultations between regulators and the legislature. - Develop courses and seminars to educate smaller businesses and the industry in general for a fee. ADRA Strategy Document Page 4 of 15
Opportunities Threats - Enlarge membership of ADRA by attracting the SME category to join, possibly through a reduced membership fee and / or demonstration of value of membership. - Enlarge membership of ADRA by attracting credit providers to join, and benefit by accessing ADRA s membership database to appoint reputable debt collection agencies. - Encourage larger members to play a more active role in ADRA to ensure the best interests of members are served in shaping the legislative environment. 3 Who is ADRA 3.1 Mission Statement Founded in 1988, ADRA is a voluntary non-profit association representing its members who operate within the regulated debt recovery industry in South Africa. ADRA aspires to be representative of the majority of practitioners within the debt recovery industry and thereby have authority and a common voice when engaging with all stakeholders regarding matters pertinent to the industry. In particular ADRA seeks to interact and lobby with government, regulatory authorities and other representative bodies in ensuring that the best interests and considerations of its members are proactively taken into account in shaping the legislative and regulatory environment in which they operate. ADRA Strategy Document Page 5 of 15
ADRA seeks to promote the debt recovery industry as a responsible and significant participant in the credit life cycle, providing sustainable and rewarding career opportunities and acting in the interests of both credit providers and debtors. ADRA establishes and maintains the positive reputation of the debt recovery industry through education, advocacy and services. ADRA provides a supportive and value added function contributing to the success of its members in areas such as training, skills development, best practice, information sharing, networking and competitive pricing from service providers. ADRA demands of its member s compliance with all applicable laws and regulations. Over and above ADRA endorses its own code of conduct, holding its members to the highest standards of excellence, professionalism, ethics and integrity. ADRA will be independent and in pursuance of its objectives will not be aligned or associated with any political organisation; will not discriminate on the basis of race, colour, gender, religion, language, political affiliation or creed; and will be transparent and open as an organisation. 3.2 Values Values are visible determinants of behaviour how does ADRA behave in the absence of policy. ADRA values: - Leadership - Integrity - Respect - Responsibility - Professionalism - Compliance - Service - Education ADRA Strategy Document Page 6 of 15
4 Where is ADRA now? 4.1 SWOT Analysis (Strengths & Weaknesses) Strengths Weaknesses - ADRA is the only long-standing organised debt recovery industry representative body. - ADRA has the resources to employ a full time paid executive to attend to the affairs of the association. - ADRA is the only organisation recognised by the Council for Debt Collectors, a key regulator, as representing the debt recovery industry in South Africa. - ADRA has a track record of providing an instrumental role in shaping the debt recovery industry positively for its members, such as attainment of the Debt Collectors Act being promulgated and amendments to the Act and tariff thereafter. - ADRA currently has only one fulltime employee. Business operations could be disrupted should he be unable to fulfil his duties. - Loss of members and consequently revenue and proportion of representativeness, driven either by financial difficulties or lack of benefit received from ADRA for fees paid. - Not being visible to key participants within government and regulatory authorities. - Rogue behaviour and practices from non-members that reflect poorly on the debt recovery industry as a whole. - Knowledge of the top collection and legal companies are being made available to ADRA by the CEO's of those companies free of charge. - ADRA enjoys a relative degree of credibility with credit providers and a historical relationship of cooperation with representative bodies of its client base, such as the Credit Providers Association. ADRA Strategy Document Page 7 of 15
4.2 Market Analysis The market (and current membership) for ADRA comprises: - A limited number of large debt collection enterprises, whether they be registered debt collectors or firms of attorneys (most of whom are ADRA members). - A number of medium sized debt collection enterprises (less penetration in terms of percentage members than large players referred to above). - A multitude of small sized debt collection enterprises (of which very few are members). - Property managers collecting arrears rental debt, required to register in terms of Debt Collectors Act (very few of who are members and they were in dispute with the Council for Debt Collectors although there application to be excluded from the Debt Collectors Act has since been withdrawn). - Many firms of attorneys who do not specialise in debt collection but who do provide such services as part of their overall client service offerings (none of which are registered as members). - A conglomerate of potential associate members that wish to supply services to members. They may or may not choose to be members. - A number of local and international Associations and Regulatory bodies, which ADRA can link with through associate membership, none of whom are members currently. ADRA Strategy Document Page 8 of 15
5 Where does ADRA want to go? 5.1 Vision Statement Members will value ADRA as an independent non-profit South African organisation, representing them and the debt collection industry with their best interests in mind, adding value to them and enabling them to succeed. Members will consider ADRA to be well managed and adhering to the highest standards of governance, integrity and ethics. Credit providers will regard ADRA as beneficial to the debt recovery industry and in protecting their interests in general; they will choose to deal with ADRA members in terms of servicing the recovery of their accounts receivables. Regulatory and statutory authorities will regard ADRA as a true and authorised representative of the debt recovery industry that is transparent, fair and objective; an organisation that contributes positively to the efficient operation of the economy and the well-being of South Africa. Debtors and the public at large will regard ADRA as a firm but fair spokesperson of the debt recovery industry and associate its members with professionalism. Service providers will attach value to endorsement by ADRA. ADRA sees itself as playing a key role in the establishment of a Sub-Saharan Africa association for the debt collection industry and thereafter participating as a member body. ADRA Strategy Document Page 9 of 15
5.2 Positioning statement For members: ADRA will represent these individuals or entities as a group when engaging with government and regulatory bodies so as to ensure the rights and obligations of its members as enshrined in laws and regulations are fair and acceptable. ADRA will endeavour to provide its members with information relevant to the industry in an accurate and timely manner. In addition, ADRA will collate and disseminate information regarding its members to appropriate forums and stakeholders including: - Debt collectors council query log - CIO query log - ADRA office query log consumer and members - ADRA Link ADRA will play a role in facilitating the education and training of its members and the staff that they employ. ADRA will in the widest sense promote the occupation of debt recovery and the debt recovery industry in general. ADRA will recommend properly assessed and approved service providers to its members and where possible negotiate contracts for competitive rates for its members in an open and transparent manner whilst applying the highest standards of ethics and integrity. For credit providers: ADRA will establish and maintain a database that it will allow registered credit providers to access containing information such as: - Reputable debt collectors who are members - Specialised debt collection services who are members - Number of debt collectors (size) of its members - Geographic footprint of members ADRA Strategy Document Page 10 of 15
For regulatory authorities: ADRA will position itself so as to be seen as the industry representative body and furthermore to proactively engage with the regulators on all legislative amendments, current and future. In particular, ADRA's stated objective is to liaise closely with the Council for Debt Collectors and other similar bodies to ensure that members interests are protected and enhanced. ADRA will represent its members and the debt recovery industry in developing reasonable and equitable legislation and standards. It will inform its members of changes in legislation and regulations and assist elected officials and government institutions to understand the importance of the industry, its needs and the role it plays. Such efforts emphasise that, while regulation is desirable, a trend towards erosion of credit providers remedies and inconsistent application of controls can harm businesses, consumers and ultimately the economy. Legislation passed needs to provide clarity for all stakeholders and not be overly onerous on one party. For consumers: ADRA will provide consumers with education and access to resources to assist them with understanding their rights and obligations. Furthermore, ADRA will assist consumers with any queries, compliments or complaints with a view to ensuring the efficient, effective and ethical operation of the debt collection industry. For service providers: ADRA will provide an entry platform into the industry and also ensure that any unprofessional, fraudulent or otherwise unsatisfactory business practices of services providers are brought to the attention of its members. ADRA Strategy Document Page 11 of 15
6 How is ADRA going to get there? 6.1 Strategic Thrusts - Increase membership o Will result in increased resources and influence thereby enabling ADRA to deliver an enhanced services to members o Will be truly representative of the debt recovery industry - Enhance the image of the debt recovery industry and ADRA members in the perception of all stakeholders, such as regulators, credit providers and debtors (including the public at large). - Get pending amendments to legislation and regulations (Debt Collectors Act) passed. - Influence the implementation of pending legislation and regulation - Enlarge the sphere of influence in the debt recovery industry - Revise ADRA Documentation - Increased resources ADRA Strategy Document Page 12 of 15
Strategic Thrust Responsible Person 1. Increase membership To do this we will: Enhance brand and awareness of ADRA through marketing initiatives, such as new brochure, website and targeted e-mail membership drive. Marina Short Review membership fees to make membership more attractive and attainable for smaller players, many of whom are struggling financially (this may require additional subsidisation from larger members) - proposal has been submitted to the Board. Consider launching targeted campaigns to attract a new class of member (i.e. small enterprises), demonstrating value offering for appropriate fees. Increase and communicate benefits to members. 2. Enhance image Enhance brand and awareness of ADRA through media releases and marketing initiatives, such as new brochure, website and targeted e- mail membership drive. Thinus Nortje Assist consumers and members in resolving complaints. Training of members through workshops and the circulation of information through newsflashes or newsletters. ADRA Strategy Document Page 13 of 15
Allocate budget for enhancing image of the debt recovery industry, consider the appointment of specialist PR provider, exploring social media networks and making website more interactive. Retain positive relationship with the media. 3. Legislation and Constantly liaising with the legislature Arnold Olivier/ regulation through consultation with the Council Stephen for Debt Collectors. Lindsay ADRA president to address communication to the minister. Ensure regular reviews and cost adjustments to tariffs according to member needs, as well as credit providers. 4. Legal opinion Obtain legal opinion on important matters impacting members. Stephen Lindsay 5. Enlarge the Maintain level of representation at Arnold Olivier sphere of the Council for Debt Collectors. influence in the debt recovery Bi-annual meetings with the Credit Charl van der industry Industry Ombudsman and other Walt industry players Align ADRA with other associations with similar objectives, such as the Estate Agencies Affairs Board, PSSF, ICM, CPA, CBA and African associations. ADRA Strategy Document Page 14 of 15
Encourage credit providers to have a definitive clause in their contracts regarding the services of ADRA members. All 6. Member interaction & ADRA resources Invest in technology to enhance member interaction, communication and the delivery of benefits. Human Capital to build the capacity of the ADRA offices. Eugene Joubert 7. Revised ADRA Ensure completion of the debt Marius Jonker documentation collectors manual for distribution at the AGM. ADRA Code of Conduct by AGM. 8. Awareness in Identify, create and leverage industry Julie Wiggins industry sector related research and / or statistics. Host or facilitate industry seminars and events. ADRA Strategy Document Page 15 of 15