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Debt counsellor barred and fined R1m for abusing consumers

Ruling may have implications for ‘call centre’ debt counsellors

A rogue debt counsellor who reached tens of thousands of debtors in SA through a call centre operation has been fined R1 million for abusing consumers. 

Heavily indebted consumers often have to place their trust in debt counsellors. Picture: 123RF/RAWPIXEL
Heavily indebted consumers often have to place their trust in debt counsellors. Picture: 123RF/RAWPIXEL

A rogue debt counsellor who reached tens of thousands of debtors across the country through a call centre operation has been stopped in her tracks by the National Consumer Tribunal and fined R1 million for abusing consumers. 

Asia Lamara has had her registration as a debt counsellor cancelled for serious and repeated breaches of the law. 

Lamara, who operated from Cape Town, has been the subject of thousands of complaints to the National Credit Regulator (NCR) over the past seven years. 

More than 3,100 consumers have complained that their credit providers terminated the debt review process because of Lamara’s failure to perform her duties in line with the National Credit Act (NCA), while others complained of being placed under debt review despite never having applied for or consented to debt review.

In a judgment handed down at the end of last month, the tribunal was scathing of Lamara’s conduct, which it said was neither professional nor fair in the way registered debt counsellors are required to be. She had therefore brought the debt counselling industry and the regulator into disrepute, it said.

The debt counsellor, who describes herself in her submission to the tribunal as “a highly successful debt counsellor who has placed 90,000 consumers under debt review”, was found guilty of 14 contraventions of the NCA. The tribunal deemed this sufficiently serious to justify cancelling her registration as a debt counsellor and fining her the highest administrative fine that it can charge. 

Lamara owns a debt counselling practice Consumer Finance Services which employs about 200 people who “assist in managing the debt counselling process”. She is also linked to a call centre operation called MSA Consulting, which provides her with the names and contact numbers of consumers. 

The tribunal found that Lamara had allowed people – usually call centre agents – who are not registered debt counsellors to pass themselves off as such and to do the work of a debt counsellor, rendering services which she ought to have personally rendered. 

The tribunal’s ruling that may have implications for other big debt counselling firms that operate call centres, says the call centre agents used a standard script to “offer, engage in, or provide debt counselling services”. 

Her other misdeeds include her:

  • Reliance on a computer programme to determine if a consumer was over-indebted instead of making this “crucial” finding herself; 
  • Failure to make this determination (of over-indebtedness) within the prescribed 30-day period, putting these consumers at risk of credit providers taking the debts out of debt review; 
  • Reporting to the credit bureaux that certain consumers were under debt review without a signed application from these consumers to go into debt review; 
  • Re-arranging consumers’ debts before sending out prescribed notices to the consumers’ creditors and the credit bureaux (one informing them that the consumers had applied for debt review and another stating whether their applications had been accepted); 
  • Failure to timeously refer debt review matters to either a Magistrate’s Court for a court order or to the tribunal for a consent order, placing consumers at risk of their creditors taking the debts out of debt review; and
  • Failure to inform consumers of the consequences of applying for debt review and an order rearranging their debts.

The tribunal found that Lamara had ignored her obligations in terms of the law and was able to do so “because she operates in an environment in which consumers are ill-educated about their rights and [are] unaware that her practices contravene the act”.

In terms of the judgment against the debt counsellor, the tribunal has ordered that she appoint an independent auditor, at her own cost, to audit all of her consumer files to establish if: 

  • Consumers applied for and consented to going under debt review;  
  • Consumers were listed as being under debt review with the credit bureaux without Lamara referring their cases to a either a Magistrate’s Court or to the NCT for an order within 60 days of applying for debt review; and
  • Lamara’s fees complied with the debt counselling fee guideline set by the regulator.

The auditor is to have been appointed within 30 business days of the judgment, which was handed down on 20 December. 

If the audit report reveals there is no record of a consumer applying for debt review, Lamara has 90 days from the date of finalisation of the audit report to remove the debt review flag from the consumers’ profiles with the credit bureaux.

Lamara was also ordered to surrender all consumer files to the regulator within 10 days of completion of the audit, along with a list of past and current clients on her books.

She has 90 days to pay the R1m fine over to the government’s National Revenue Fund. 

If you are one of Lamara’s clients, you should contact the regulator and ask to be assigned to another debt counsellor.