South African Perspective
Cynthia Matshiakgotshi
Head Of Department – Credit Information
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What is alternative dispute resolution
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Ombudsman in South Africa
o
Difference between ADR and litigation
o
National Credit Act
o
Credit bureaux
o
Launch of Credit Information Ombud and name
change
o
Advantages of ADR
o
Challenges within the credit industry
o
o
Current public perception
Conclusion and recommendation
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Informal process
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Common factors
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Alternative to litigation
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No regulating authority
o
Voluntary Ombud Schemes
- Credit Ombud
- Short term and Long Term Insurance
- Ombudsman for Banking services
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Statutory Ombud Schemes
- Provident Fund Adjudicator
- Financial Service Providers (FAIS)
o
Other Industries Ombud Offices
- Motor industry, Dental, Press and Consumer Goods
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Litigation
- Public process
- Formal and technical
- External rules
- Execution of judgment
- Command process (court orders)
o
Alternative dispute resolution
- Private process
- Informal process
- Internal rules
- Consensual process
o
National Credit Act 34 of 2005
- Applicable provisions to ADR
- Section 134
- Section 129
o
Proposed amendments
- NCA amendment bill – 29 Mei 2013
- Regulation of ADR
o
o
All credit transactions which are undertaken in
South Africa are bound by the National Credit
Act 34 of 2005 (NCA)
The NCA was designed to:
- Protect the consumer
- Promote a fair, transparent and accessible credit
market and industry
- Promote and advance the social and economic
welfare of South Africans
o
Credit Bureaux
- Registered credit bureaux
- Sources of information
- Who is listed at the credit bureaux
- Type of information listed
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Credit Bureau Association
- Responsibilities
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Transunion
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Experian
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XDS
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Compuscan
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Regulating authority
- Credit information reporting is regulated
- National Credit Regulator
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Custodian of data
-
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ID numbers, names and surnames, contact details,
court orders, payment profile, trace alert, enquiries,
employment details etc.
Provider of data
⁻ Negative and positive credit information
o
Obligation of the credit bureaux
⁻ Verification of data
⁻ Protection of data
o
Credit and service providers
- Easy access to credit information
- Better credit assessment
- Minimising bad debts
o
Consumers
- Improved access to credit
- Prevent over-indebtedness
- Encourage positive payment behaviour

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Level of analytical skills available in credit provider
Extent of utilisation of credit report
Low = 5% and
High = greater than 5%
Where an institution has capability to utilise credit
reports in credit decisions, credit reports provide
significant value towards making good credit
judgements. In such instances, credit reports
provide a major contribution in risk management
o
South Africa has a sophisticated credit bureaux
system
o
We were nominated as of the best in the world by
World Bank in terms of ease of getting access to
credit based on the strength of legal rights and the
depth of credit information
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Receive credit report
- Free of charge
- Minimum fee of R20.00
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To challenge the accuracy of the information
- Credible evidence or
- Removal of the listing
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To redress
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To reason why credit application is declined
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‘Black listing’ of consumers
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Lack of confidence in the dispute process
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Threat to close the credit bureaux
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Violation of consumer rights
- Privacy
- Credit bureaux are biased
o
Credit bureaux are responsible for declining credit
applications (misconception)
o
Government considered closing the credit bureaux
because they were viewed as the possible
contributing factors to the deteriorating economy
based on the following:
- Incorrect or incomplete credit information
- Lack of accountability between the credit bureaux and
subscribers
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No regulating authority
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Mismatch of credit information
- Identity numbers
- Name and surnames
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Consultation by the relevant credit industry
stakeholders (credit bureaux, credit providers and
independent members)
- CIO launched 21 March 2004
- prior to the National credit Act 34 of 2005
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Registered with Financial Services Ombud Schemes Act
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Reporting structure
- Credit Ombud Council
- Consumer bodies, the credit providers, credit bureaus
and independent members
o
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2009 - Gap in the market identified
Extended jurisdiction
- Non-bank credit disputes
- Name changed to Credit Ombud
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Resolve credit bureaux related disputes
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Consumer education and awareness
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Afford consumers opportunity to redress
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Disputes are logged:
- Via internet, telephonically, by fax or in person
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To promote responsible credit information
reporting (credit bureaux and subscribers)
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Credit Information Department
- Inaccurate or incorrect credit information;
- Insufficient or incomplete credit information;
- Out-dated credit information
- No fault default
- Prescribed debt
- Double listing
- Identity fraud
- Service disputes
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Non-bank Credit Department
−
(a) Where the member breached any relevant laws or
regulations
−
(b) Breached an applicable code of practice or code of
conduct provided for by relevant legislation, regulations
or by-laws
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(c) Not met standards of good practice
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(d) Acted unfairly and/or unconscionable towards a
complainant
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Complaints and enquiries received
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Calls received by the Credit Ombud call centre
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Disputes opened by the Credit Ombud
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Disputes close d by the Credit Ombud
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Average days to resolve a dispute
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Percentage of disputes resolve d in favour of
consumers
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Amount recovered for complainants
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Media Equivalent Advertising Value
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Workshops
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Cost per dispute
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Total expenses for the year
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Effective disputes resolution processes
−Paperless complaint system
−All in writing / record
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Values
−Fairness, independence, honesty
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Manner of finalization
-
Facilitation, recommendation, mediation and ruling
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Our decision is binding on members, but not on
consumers
−
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Consumer education and awareness
- Workshops
- Electronic and print media
- Credit bureaux
- Credit / service providers
- Referrals
Log complaint
with credit
bureau or
credit
provider
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Log complaint
with Credit
Ombud
Consumer
Unhappy with
resolution or
no response
20 business
days to
resolve matter
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Funding
- Office funded by credit industry
- Non profit
o
Free to consumers
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Advantages of ADR
- Cost saving
- Speed
- Efficiency
- flexibility
- Informal
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Credit Industry
- Identity theft
- Protection of personal information
o
Credit or service providers
- Bad debts due to fraud
- Unsecured lending
o
Credit Ombud
- Lack of responses from service/credit providers
- Delayed responses from service / credit providers
- Third parties who are charging consumers for our free
services
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Awareness
- Lack of branches
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Although credit information rating by the World
bank was good, there is still a negative perception
about credit bureaux
o
Negative credit information is still being viewed as
hampering the growth of our economy
o
The above may be due to insufficient consumer
awareness and education about the credit bureaux
o
Apart from the challenges and Co experience ADR is
effective in resolving credit bureau and credit related
disputes
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What is required for effective ADR process:
- Communication
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Consultation with the relevant stakeholders
- Get buy in
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Clear dispute process
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Effective case management procedures and timelines
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Clear policies
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Staff (legal and credit background, analytical skills)
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Ongoing consumer awareness and education!
Thank you!