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annual report

2 0 11

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contentsHives & Hills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Mission & Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Chairperson’s report . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Credit Ombud Council . . . . . . . . . . . . . . . . . . . . . . . . 6

Report of the Ombud . . . . . . . . . . . . . . . . . . . . . . . . . 8

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Credit information disputes . . . . . . . . . . . . . . . . . . 9

Non-bank credit disputes . . . . . . . . . . . . . . . . . . . 9

Debt Counselling Department . . . . . . . . . . . . . . 11

Projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Centralised helpline . . . . . . . . . . . . . . . . . . . . . . . 13

The International Network of Financial Services

Ombudsman (INFO). . . . . . . . . . . . . . . . . . . . . . . 13

Appreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Key figures at a glance . . . . . . . . . . . . . . . . . . . . . . . 14

Consumer awareness and education. . . . . . . . . . . . . 15

Statistics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

throughout human history, all cultures have admired ants for their

industriousness, teamwork and sense of purpose. It’s estimated that there

are up to 10 quadrillion (10 x 10 15) individual ants on earth at any one time,

with a combined biomass similar to that of the total human race.

Page | 2

hIves & hIlls tireless hard work, teamwork, dedication, focus. these attributes could easily be the cornerstones of the latest

theory on business success, yet the principles have been in operation in the natural world for millions of years.

humans have always been fascinated by the wonders of the insect world. Massive termite mounds, built apparently invisibly by the tiniest creatures. the perfection of a honeycomb, dripping with nature’s

golden sweetness. the uncompromising industry of a colony of ants, silently striving together towards a common goal. could these insignificant beings possess a secret knowledge that could

benefit humankind?

early civilisations were inspired by their studies of nature. they discovered that ants plan ahead, harvest when food is plentiful and consume when the need is greatest. that they

labour tirelessly to keep their nests clean and look after their young. that the entire colony is driven by an undefined need for the good of all the individuals. and that

all this is accomplished silently, underground, in a world of total darkness.

the results of these early studies became part of our collective wisdom. “Go to the ant, you sluggard,” the proverb tells us. “consider its ways and be wise.”

honey-bees demonstrate a similar dedication to hard work – and produce a reward we appreciate to this day. everyone

Page | 3

Mission stateMent

the Credit oMbud will:

• Effectivelyresolvedisputesbetweenmembersofthecreditindustry and credit receivers (consumers and businesses) with regard to credit, credit information and debt counselling matters.

• Actasaneducatorofthepublicinmatterspertainingtothecredit industry.

• Atalltimesacthonestly,independentlyandfairly;balancingthe rights of all parties.

Values for the offiCe of the Credit oMbud

The following values are not negotiable and cannot be diminished in any way:

fairWe will act in the best interests of all parties, taking both sides into consideration and considering the merits of each case carefully.

independentWe will not take sides and will remain impartial at all times. no individual or organisation will be in a position to unduly influence us.

honestWe will deal openly with any issue brought before us, asking the relevant questions and communicating clearly and transparently.

wants to live in “the land of milk and honey”. our ongoing studies continue to amaze us. recent research has revealed that honey-bees surround intruder wasps that threaten their nests, raising the temperature until the wasp perishes from overheating.

at the office of the credit ombud we take inspiration from nature. We strive tirelessly to effect positive outcomes in conflict resolution. We do so behind closed doors, often without acclaim, backed by an organisation dedicated to our common goal. after years of innovation and growth, we are now settling into our designated roles with the assurance of experience. experience has even taught us that, despite everyone’s best intentions, not every outcome can invariably be favourable to all parties concerned.

the natural progression of the seasons proves there is a rhythm to life that should not be ignored. that there is a time to grow, and a time to consolidate. We have learned that sometimes, the most important aspects of growth and consolidation happen behind the scenes. and that it is vital to ensure that all processes are in place if the system is to function smoothly, as one, towards a common goal.

nature will continue to be our inspiration. to the benefit of all.

MIssIon & values

2011 | 4

Found on every continent except the antarctic, there are an

estimated 22 000 species of ant, only 12 500 of which have

been classified by science.

2011 | 5

of all the years that I have been chairperson, 2011 was possibly the most demanding for the council. It is only through the guidance and support of the council that the office of the credit ombud is where it is. the council took up the challenges facing the office professionally and with determination.

I must give special gratitude to each and every council member for their guidance, input and unwavering support.

Gratitude also goes to the ombud and his staff. the office has grown substantially but continues to run like a well-oiled machine. Well done, Manie, you make the office proud. remember, you can catch more flies with honey than with vinegar.

Finally, and as is statutorily required, I confirm that the office of the credit ombud complies with section 10(1)(b)(ii) of the Financial services ombud scheme act, 2005, in that there is constant monitoring for compliance of the scheme and ensuring adherence to the requirements of the Fsos act.

Best wishes

regards

nicky lala-Mohan

chairperson

there is an old Moroccan proverb that says “better a handful of bees than a basket full of flies”, meaning that you must be thankful for what you have.

For the year 2011, the office of the credit ombud can be thankful for growing from strength to strength and really making a difference in dispute resolution for the consumer.

an amount of r2,4 million was recovered for consumers in the non-bank credit and debt counselling departments. Greater outreach was achieved through consumer education. Its expanded mandate to do resolution of debt counselling matters having settled and the traditional department of credit Information growing, the office is poised to become the leading voluntary ombud scheme.

there is much debate about the future of voluntary ombud schemes and the creation of a statutory super-ombud. this emanates from the national treasury policy document issued in February 2012 that set out proposals for strengthening the financial regulation in south africa.

the shift to the twin peaks system of financial regulation will result in the Financial services Board being responsible for market conduct whilst the reserve Bank will be responsible for prudential regulation. Whatever the outcome of that debate, the office of the credit ombud is ready to take its rightful place.

Whilst the global economy continues to be depressed, credit extension in south africa seemingly is stable, aiding and abetting economic activity by consumers. however, those consumers still need protection and easy access to resolution of disputes.

chaIrperson’s reportnicky lala-Mohan

creDIt oMBuD councIl

InDepenDent MeMBersInDepenDent MeMBers

creDIt InDustry

Dr Tjaart van der Walt

(Deputy Chairperson)

Tefo Raditapole

Motor Vehicle Finance Association

Elize Easton

Debt Counsellors Association of South AfricaPaul Slot

National Clothing Retail Federation

Michael Lawrence

Micro Finance South AfricaDave de Beer

Thuli Zungu

2011 | 6

the office of the credit ombud is an independent and impartial body that reports to the co council and not to the credit industry. the council consists of three (3) constituencies: consumer bodies, credit industry, and independent members of the council:

2011 | 7

consuMer BoDIes

creDIt InDustry

InDepenDent MeMBers

Women’s National CoalitionLaura Kganyago

Credit Bureau AssociationRamesh Pillay

Credit Providers Association Gavin Long

Consumer Goods CouncilPatricia Pillay

Siva Naidoo

Patricia McCracken

Hassen Lorgat

Black SashThandiwe Zulu

South African National Consumer UnionLillibeth Moolman

Banking AssociationNicky Lala-Mohan

(Chairperson)

Page | 8

Account of activities 2010 | 8

report oF the oMBuD

Page | 9

report oF the oMBuDintroduCtion

the year 2011 was filled with lots of happenings around the world, from the african uprising and earthquakes in new Zealand and Japan, to the killing of osama Bin laden and Muammar Gaddafi. In terms of the economic outlook, the major world markets are still struggling to recover from the 2008 financial crisis. the effects on south africa are evident, with household debt at 75% of disposable income and consumers with impaired credit records totalling 46,2%. these figures are very high considering the present low interest rates, and when the interest rates increase, we will experience the full effect of the financial crisis.

at the office of the credit ombud we focused on what we do best, and that is to keep assisting consumers with dispute resolution. We focused on consumer education and worked hard to disseminate information about responsible borrowing and the value of a good credit profile. 2011 also brought an additional responsibility in terms of our expanded mandate and we had to pay extra attention to disputes in terms of debt counselling. as this department is new, we learned a great deal about the debt counselling industry and the challenges that it brought. We were compelled to keep our attention on the non-bank credit department, as the disputes finalised in this department increased by 212% in the second year of operation. the credit information department was stable and we managed approximately the same number of disputes as the previous year.

Thecallstoourcallcentreincreasedby13%;thenumberofdisputes closed in all departments increased by 39%. We recovered an amount of r2,4 million for consumers in the non-bank credit and debt counselling departments. the credit ombud had a phenomenal year with consumer education. our media exposure topped r16,2 million, which was an increase of 24% compared to the previous year, and we participated in 55 community workshops and outreach activities. on average we now take 41 days to finalise a dispute, which is a significant improvement from the previous year, and our cost per dispute is r1 896.

With all of the activity at the credit ombud office it is no surprise that this year we chose the theme of our annual

report to be ants and Bees. these insects are fantastic

examples of consistent hard work, teamwork, dedication and focus. It is exactly these attributes, which we also subscribe to at the office of the credit ombud, that enable us to serve consumers and the credit industry in delivering our mandate.

Credit inforMation disputes

the national credit regulator publishes the credit Bureau Monitor on a quarterly basis. this monitor is a reliable tool to ascertain the ability of the country’s credit active population to repay their debt. In December 2011 there were 19,34 million credit active consumers in the country and 46,2% of that population had impaired credit records. consumers have an impaired record if any of their accounts are classified as three or more payments in arrears or has an “adverse listing”, or they have a judgement or administration order against their name. this means that 8,93 million people could find it difficult to access credit in the country.

We closed 3 192 disputes in this department, which is 2,2% more than in 2010. a major concern in this area of the jurisdiction is that monthly payment profile records are not updated by credit providers and that rescinded judgements remain on the credit bureaux. a reason that this part of the jurisdiction has increased is that fraudulent rescission documents are produced by consumers and the credit bureaux must be more vigilant to investigate these documents. as a result, the time to investigate these documents increases beyond the required 20 working days.

non-bank Credit disputes

the department is operating for the second year, and although we started from a low base, there was an increase of 212% in closing the number of disputes in this department. a total of 1 337 disputes were closed and the department was responsible for the recovery of more than r1,6 million, which is an increase of 143% compared to the previous year.

the major concern in this area of jurisdiction is in terms of statements, where payments are misallocated or statements are not forthcoming from credit providers.

Bees are very closely related to ants, boast a similar number

of species and share their cousins’ work ethic – ‘busy as a bee’

being a byword in many cultures. they also share similar ranges,

being found on every continent except antarctica, and in every

habitat that supports insect-pollinated flowering plants.

Manie van schalkwyk

Page | 10

Account of activities 2010 | 10

the staFF at the creDIt oMBuD’s oFFIce.

top row (right to left): Daisy Guntert – call centre Managerneo loeto – public relations Managercynthia Matshiakgotshi – head of Department: credit InformationKhumo Bodibe – personal assistant and receptionistJacob sefure – call centre agentMagda van Biljon – case Managerlee soobrathi – case ManagerKabelo teme – call centre agent

Middle row (left to right): Bets noordman – BookkeeperJanine abrahams – case Manageranthony Mpyatona – Junior case Manageryvonne Barnard – case ManagerManie van schalkwyk – ombudsman

Bottom row (left to right): Buti Magagula – Junior case Managersamantha pather – case Managerlucy Mokhweba – General administrative assistantreana steyn – head of Department: non-Bank credit and Debt counselling (legal)siyabonga Makhathini – Junior case Manager

samuel Machaka – case Manager (absent)

possession of their assets, whilst at the same time continuing to service their debts. the department recovered an amount of r801 000 for consumers.

projeCts

Easy access for financial consumer complaintsMoney advice association, trading as iMali Matters

the credit ombud engaged in a project with the Department of trade and Industry, Finmark trust and african Bank to investigate the viability of establishing offices in the community where consumers will receive independent, face-to-face guidance in terms of financial matters. this project ran for one (1) year to test the viability. an association was formed with the above parties known as the Money advice association and the offices are called “iMali Matters”, loosely translated as “Money Matters”. these offices not only assist consumers with independent, face-to-face guidance in financial matters but also double up as a centralised office where consumers lodge financial complaints. staff in these offices assist consumers in taking down complaints and forwarding these complaints to the relevant ombud or regulator’s office.

the project was awarded a grant of £250 000 by the Financial education Fund, while a consortium partner, african Bank, contributed r1 million to the project. the test phase came to an end in november 2011 and independent consultants conducting the final measurement and evaluation reported the following:

“670 consumers submitted application forms and 735 separate cases were registered on the system, which resulted in 1 533 disputes. often financial complaints were escalated by social circumstances, which required that the counsellor first had to investigate the social issue before being able to offer financial guidance.

We are of the view that the iMali project was in principle successful in testing the benefit to consumers of a one‐on‐one, face-to-face support organisation for consumers and does have a positive role to play in assisting consumers to become more financially capable. such a project is expensive and various changes and enhancements would need to be made for the initiative to be viable to funders and for the initiative to attain maximum benefit.”

an independent consultancy also measured the impact on consumers’ credit behaviour after they visited the iMali offices. credit Bureau data was obtained retrospectively on each consumer as at the time of the iMali Matters programme and again as at november 2011 to ascertain if there had been any deterioration or improvement in consumers’ credit Bureau profiles. the key variables analysed included the judgement and adverse information on the bureau, the trade lines that the consumer has on the bureau and more importantly, how they are conducting these accounts with regard to utilisation and payment of the credit facilities.

the independent consultants also analysed these consumers’ credit bureau scores, a three-digit score that indicates the overall health of each consumer’s credit portfolio and the consumer’s likelihood of defaulting on any credit facilities in the future. the higher the score, the lower the credit risk of the consumer. the outcome was reported as follows:

“there has been an improvement in the bureau score between the observation and outcome period. the average score increased from 606 to 608 points, indicating an improvement in the overall credit profile of the consumers.”

debt Counselling departMent

In 2010 we were approached by the national credit regulator, the credit industry and the debt counselling industry to manage debt counselling disputes. the credit ombud council as well as the Financial services ombud schemes council approved the extension of our mandate and the office started receiving the first cases in the beginning of 2011, but officially launched the new department in april 2011.

the process that was agreed upon by the industry requires the complainant to first refer the complaint to the national Debt Mediation association (nDMa) or Debt counsellors association of south africa (Dcasa). If the complaint has not been resolved after 20 days, the matter may be escalated to our office. In other words, the more intricate and complicated matters that require an in-depth and comprehensive investigation, and the urgent matters where a sale in execution or a repossession is imminent, land up in our office. We finalised 414 disputes for the year. We have the capacity to deal with more matters, but the problem is that consumers (and possibly some debt counsellors) do not know about the assistance that is available.

It is widely accepted that the debt counselling process had many teething problems and that there were numerous challenges with the process itself as well as the court processes. Fortunately, all the industry players worked together to address these issues, and agreements are now in place that streamline the process in many of the cases.

our experience to date highlighted the following issues:

• Terminationsasaresultofpooradministrationorwherethedebt counsellor does not ensure that the correct process is followed.

• Alackofcommunicationbetweenthepartiesaroundproposals, counterproposals, the consequences of a credit provider’s rejection of the proposal and termination letters.

• Counterproposalsarenotcommunicatedtotheconsumer,resulting in termination, whereas the consumer would have agreed to pay the amount demanded by the credit provider.

• Failurebythedebtcounsellortoactuponthereceiptofthetermination notice.

• Pitfallsofthedebtcounsellingprocess–andtherisks–arenotexplained to consumers.

• Theeffectofareducedmonthlyinstalmentisnotexplainedto consumers, and the resultant arrears and additional interest and costs come as a shock.

• Failurebytheconsumertopaythemonthlyinstalmentasagreed.

• Consumersdonotnotifycreditprovidersofchangesofaddress – and as a result they do not receive the termination letters or section 129 notices, or even the summonses.

• Mattersare“lefttoolate”bytheconsumersbeforetheyattempt to find answers or negotiate with the creditors to assist them. Matters are referred to Dcasa, the nDMa and the ombud at a very late stage.

there is a big misconception that everyone qualifies for debt counselling, which is not the case, and neither is the debt counselling process a ‘miracle cure’ for a consumer’s over-indebtedness.

We look at complaints holistically and try to reach an amicable solution beneficial to all, whilst still considering the rights and obligations of all parties involved. through the cooperation of creditors and debt counsellors, our office achieved significant successes this past year, and a number of sales in execution and repossessions were stopped. this resulted in consumers retaining

2011 | 11

one-third of our food supply depends on insect pollination, and the bulk of this

is performed by bees. Many bees will gather pollen from a variety of flowers,

while some specialise, gathering from only a single plant type.

Page | 12

Page | 13

the report continues:

“From the positive changes in consumers’ credit profiles between attending the iMali Matters Money advice centres, one can reason that the advisory service delivered a positive impact with respect to educating consumers on the dangers of using and managing credit incorrectly. since the advice, consumers have been able to settle debt and improve their overall credit standings.”

the Money advice association council will decide on the future of the iMali offices.

Centralised helpline

the credit ombud, other voluntary financial ombudsmen, FaIs ombudsman and the pension Funds adjudicator, working together with the Financial services Board and the national credit regulator, have successfully implemented a centralised helpline to assist consumers in eliminating any confusion regarding whom to contact when wanting to lodge a complaint in the financial services sector. this helpline is manned by operators to assist prospective complainants in directing their complaints to the correct office. the easy-to-remember number is 0860 oMBuDs (662837).

some results for the year are indicated below:

ORGANISATIONCAllS

RECEIvEdPERCENTAGE

Banking ombuds 1 624 27%

credit ombuds 1 062 17,6%

short-term insurance ombuds 324 5,4%

long-term insurance ombuds 454 7,6%

non-ombuds related 2 433 40,5%

pension Funds adjudicator 115 1,9%

Total 6 012 100%

although the volume of calls to this contact centre is relatively low, the service is very important to consumers to ensure that there is no confusion regarding which ombud office to contact to lodge a complaint.

the international network of finanCial serViCes oMbudsMan (info)

the International network of Financial services ombudsman (InFo) is a network created by Financial ombudsmen on a global basis to network and share experiences within the industry. experience has shown that ombud offices around the world deal with similar challenges, thus this forum creates an opportunity to learn from different ombud offices around the world. every year the members of InFo get together for a conference.

the 2011 international conference was held in vancouver, canada.

appreCiation

I would like to record my sincere appreciation to the chairperson, nicky lala-Mohan, the co council and the staff of the co for their dedication, hard work and positive attitude during the past year. their efforts ensured that the co could serve our complainants effectively and impart our knowledge to consumers.

Manie van schalkwyk

ombudsman

Page | 14

Account of activities 2010 | 14

complaints and enquiries received . . . 14 167

calls received by the credit ombud call centre . . . 24 178

Disputes closed by the credit ombud . . . 4 943

average days to resolve a dispute . . . 41,4 days

percentage of disputes resolved in favour of consumers . . . 53%

amount recovered for complainants . . . R2,4 million

Media equivalent advertising value . . . R16,2 million

community workshops . . . 55 in 7 provinces

total expenses for the year . . . R9,3 million

cost per dispute . . . R1 896

Key FIGures at a Glance

Page | 15

since its inception, the office has continued to create awareness of its existence and educate consumers in credit matters.

In 2011 we enjoyed a highly successful year by making consumers aware of our existence through the media as well as outreach activities, working with provincial consumer affairs sections, nGos and other community-based organisations.

We further received a generous travel sponsorship from the credit Bureau association, which enabled us to participate in consumer workshops covering 7 provinces. We participated in 55 outreach activities or workshops. the main objective is to provide education and reach consumers of all provinces in the country.

our outreach activities alone could never amass the level of awareness and consumer education we currently enjoy and aim for. the media has been another instrumental tool in enabling us to carry our message to consumers countrywide.

our participation in print and electronic media keeps growing every year. the year 2011 saw our office reach the eav (equivalent advertising value) of over r16,2 million, which is the highest figure this office has ever achieved. It was a great improvement of 24,1% compared to the previous year.

We participated in 197 radio and/or television interviews on 50 different radio and television stations and featured 175 articles in the print media (newspapers and magazines) in 82 different newspapers and magazines. educational press releases are written by the credit ombud and sent to the media constantly. these press releases also generate radio and television interviews, which in turn increases our exposure and awareness to the public.

neo loeto

public relations Manager

consuMer aWareness anD eDucatIon

Most animals learn by imitation, but ants are thought to be the only creatures

besides humans that can learn by interactive instruction. an older, more

knowledgeable ant will, for instance, tutor a younger one in foraging until the skill

has been perfected.

Page | 16

In total, 14 167 compaints and enquiries were received by the credit ombud for the period January to December 2011.

this is an average of 1 180 complaints and enquiries per month.

this figure increased from 13 499 in 2010, an increase of 5%.

0

500

1000

1500

20002011

2010

DecNovOctSepAugJulJunMayAprMarFebJan

980

1 14

5

1 06

0 1 16

3

1 14

21

379

1 35

878

5

1 18

21

202

721

1 01

9 1 18

71

186 1 28

8 1 47

2

1 38

61

135

1 47

41

332 1

529

1 20

3

765

573

Graph 1: Complaints and enquiries

2010 – total 13 499 2011 – total 14 167

O

N

M

L

K

J

I

H

G

F

E

D

C

B

A

A

B

C

D

E

F

G

H

IJ

KML

NO

Graph 2: Complaints and enquiries categorised

Description %

a - Default listing 22,22%

B - complaint against credit grantor 20,50%

c - consumer requesting credit profile 15,61%

D - Judgement 13,46%

e - enquiry 5,33%

F - Debt counselling 3,92%

G - Garnishee 3,90%

h - other 3,42%

I - administration 3,07%

J - Identity theft 2,73%

K - payment profile 2,27%

l - complaint against debt counsellor 1,93%

M - prescription of debt 1,07%

n - credit application declined score 0,32%

o - complaint against credit bureau 0,25%

Total 100%

the office categorises the complaints and enquiries with the aim of understanding what consumers’ most pressing issues are and how to direct educational efforts.

statIstIcs

Page | 17

the credit ombud call centre assists credit receivers with complaints, handles enquiries and records disputes on its complaints handling system. the call centre will explain processes and procedures to complainants and also provide general advice to the public.

In total, 24 178 telephone calls were recorded by the co contact call centre for the period January to December 2011.

this is an average of 2 015 calls per month.

this figure increased from 21 473 in 2010, an increase of 12,6%.

0

500

1000

1500

2000

25002011

2010

Dec Nov Oct Sep Aug Jul Jun May Apr Mar Feb Jan

1 75

52

058

1 86

51

931

2 33

72

133

1 90

92

297 2 45

42

272

2 11

9

2 42

7

2 14

8

1 92

6

1 82

3

1 12

8

2 13

0

1 87

5

1 76

41

609 1

789

1 65

5

1 69

5

552

Graph 3: Calls received at Credit Ombud call centre

2010 – total 21 473 2011 – total 24 178

In total, 4 943 disputes were closed by the credit ombud office for the period January to December 2011.

this is an average of 412 disputes per month.

this figure increased from 3 550 in 2010, an increase of 39%.

the main contributors to the significant increase in disputes are from the non-Bank credit Department as well as the newly expanded jurisdiction of debt counselling disputes.

0

100

200

300

400

500

600

700

8002011

2010

Dec Nov Oct Sep Aug Jul Jun May Apr Mar Feb Jan

332 36

0

330

268

426

432

254

171

124

272

285

450

386

384

383

443

183

369

532

753

316

162

411

467

Graph 4: disputes closed: All departments

2010 – total 3 550 2011 – total 4 943

In total, 3 192 disputes were closed by the credit Information Department for the period January to December 2011.

this is an average of 266 disputes per month.

this figure increased from 3 122 in 2010, an increase of 2,2%.

0

100

200

300

400

5002011

2010

Dec Nov Oct Sep Aug Jul Jun May Apr Mar Feb Jan

320

313

316

383

360

190 22

210

2

107

161

239

346

340

237

314

276

364

324

259

236

149 17

3

434

149

Graph 5: disputes closed: Credit Information department

2010 – total 3 122 2011 – total 3 192

Page | 18

In total, 1 337 disputes were closed by the non-bank credit Department for the period January to December 2011.

this is an average of 111 disputes per month.

this figure increased from 428 in 2010, which was the first year of operation of this department – an increase of 212%.

the significant increase in disputes is as a result of an increase of awareness among consumers, as 2011 was the second year of operation for the department.

0

50

100

150

200

2502011

2010

Dec Nov Oct Sep Aug Jul Jun May Apr Mar Feb Jan

1246

14

43

3258

77

4673

133

103 11

4

169

172

250

69

34

45

57

13

46

17

71 71

Graph 6: disputes closed: Non-bank Credit department

2010 – total 428 2011 – total 1337

this was the first year of operation for the Debt counselling Department, which was officially launched in april 2011. complaints volumes are still smaller than expected, but the Department handles the most pressing and complex disputes compared to other departments.

In total, 414 disputes were closed by the Debt counselling Department.

this is an average of 35 disputes per month.

0

10

20

30

40

50

60

70

802011

Dec Nov Oct Sep Aug Jul Jun May Apr Mar Feb Jan

1

7

1

11

34

31

64

54

69

62

66

14

Graph 7: disputes closed: debt Counselling department

2011 – total 414

Page | 19

Graph 8: disputes closed by jurisdiction: Credit Information department

Description %

a - Insufficient/incomplete credit information 35,15%

B - Invalid case 25,42%

c - outdated credit information 14,64%

D - consumer withdrew complaint 8,29%

e - credit grantor did not supply accurate information 7,23%

F - Double listing 3,16%

G - consumer was not notified of adverse listing 2,49%

h - Fraud cases 2,46%

I - outside jurisdiction 0,74%

J - prescription of debt 0,42%

Total 100%

Categories of jurisdiction

a - Insufficient or incomplete credit information is listed on the credit receiver’s credit profile – 35%

B - In these cases the co office has not ruled in favour of a complainant – 25%

c - the negative credit information listed on a credit receiver’s credit profile is displayed on a credit bureau for a longer period than is dictated by the national credit act – 15%

D - the complainant has withdrawn the case. this usually happens if complainants fail to respond to requests for information or a respondent’s version of the case. complainants receive numerous requests from the co office to respond before we assume that a complainant does not want to proceed with the case. – 8%

e - the subscriber to the credit bureaux supplied inaccurate information to the credit bureaux – 7%

F - the credit receiver has been listed more than once in terms of the same debt – 3%

G - the subscriber to the credit bureaux did not inform the consumer that they would be listing him/her adversely on the credit bureaux – 2%

h - a credit receiver has been listed on a credit bureau due to a fraudulent transaction – 2%

I - these cases fall outside the jurisdiction of the co office – 1%J - the debt has prescribed – 0,5%

J

I

H

G

F

E

D

C

B

A

A

B

C

D

E

FG H I

J

Insufficient/incomplete credit information 35% (33%)

Invalid case 25% (17%)

outdated credit information 15% (25%)

consumer withdrew complaint 8% (8%)

credit grantor did not supply accurate information 7% (5%)

Double listing 3% (2%)

consumer was not notified of adverse listing 2% (2%)Fraud cases 2% (3%)

outside jurisdiction 1% (2%)

prescription of debt

Figures in brackets relate to previous year

Page | 20

Graph 9: disputes closed by jurisdiction: Non-bank Credit department

Description %

a - Invalid case 24,31%

B - outside jurisdiction 21,97%

c - statements of account sec 107 17,29%

D - consumer withdrew complaint 11,23%

e - service disputes 9,13%

F - Garnishee orders 5,98%

G - prescription of debt 3,31%

h - contractual disputes 2,58%

I - Interest 2,42%

J - Fraud cases 0,97%

K - In Duplum 0,16%

Total 100%

Categories of jurisdiction

a - In these cases the co office has not ruled in favour of a complainant – 24%

B - these cases fall outside the jurisdiction of the co office – 22%c - consumers are disputing the information on the statements or

the statements are not forthcoming from the credit providers – 17%

D - cases where consumers have withdrawn the case during the investigation – 11%

e - service disputes – 9%F - Garnishee orders – 6%G - the debt has prescribed – 3%h - contractual disputes – 3%I - the interest calculations were disputed by consumers and the

co has recalculated the interest – 2%J - Fraud cases – 1%K - In Duplum – 0,2%

K

J

I

H

G

F

E

D

C

B

A

A

B

C

D

E

F

GH I J K

Invalid case 24%

outside jurisdiction 22%

statements of account sec 107 17%

consumer withdrew complaint 11%

service disputes 9%

Garnishee orders 6%

prescription of debt 3%contractual disputes 3%

Interest 2%Fraud cases 1% In Duplum 0,2%

Page | 21

Graph 10: disputes closed by jurisdiction: debt Counselling department

Description %

a - no party at fault 33,92%

B - Debt counsellor at fault 33,04%

c - consumer at fault 19,38%

D - credit provider at fault 7,93%

e - outside jurisdiction 3,96%

F - pDa at fault 0,88%

G - Invalid case 0,88%

Total 100%

A - No party at fault – 33,92% In this category, nobody specific is at fault. the consumer does

not have the means to fulfil any of the requirements to settle the outstanding debt in an acceptable time frame, therefore the credit provider has rejected the original offer. the consumer cannot offer more money and cannot fulfil the counter-offer made by the credit provider.

B - debt counsellor at fault – 33,04% In this category the debt counsellor was at fault. the debt

counselling process has failed due to actions or failure of actions of the debt counsellor. an example of this is where the debt counsellor fails to communicate counterproposals from credit providers to consumers.

C - Consumer at fault – 19,38% In this section the consumer is at fault, as the consumer did not

follow the instructions of the debt counsellor or did not pay the agreed amount.

d - Credit provider at fault – 7,93% In this section the credit provider is at fault. an example of this is

where credit providers terminate the debt counselling process unfairly.

E - Outside jurisdiction – 3,96%

F - Payment distibution agent at fault – 0,88% In this section the pDa did not pay the money over to the credit

provider as expected.

G - Invalid case – 0,88%

G

F

E

D

C

B

A

G

A

B

C

D

E F

no party at fault 34%

Debt counsellor at fault 33%

consumer at fault 19%

credit provider at fault 8%

outside jurisdiction 4%

pDa at fault 1%Invalid case 1%

Page | 22

Intervention: the majority of cases are resolved through intervention from the credit ombud office. an intervention is where the co is able to resolve a dispute without extended deliberation with the credit provider or with the credit bureaux. this is where the co points out inaccuracies based on our assessment of the merits of the dispute fairly, without undertaking a full investigation. We aim to assist all parties in an attempt to achieve an amicable, unbiased and speedy outcome, without protracted negotiation.

Facilitation: a large number of matters are resolved through the process referred to as facilitation. this is where the coassists by undertaking an investigation based on the information provided by the relevant parties, probing issues and verifying the alleged facts in order to make an informed decision. the ombud will provide guidance on the law and communication between the parties, keeping the desired outcomes in mind.

Mediation: this is a formal meeting between the parties to the dispute with the ombud as mediator. It involves a discussion to promote compromise, settlement and reconciliation to achieve an outcome that is fair and unbiased. the ombud guides the debate until agreement is reached between the parties, without making any formal rulings or decisions. the office had only one case for mediation in the past year.

Recommendation: should a dispute remain unresolved despite the processes of intervention, facilitation or mediation, the ombud will proceed to evaluate the facts of the dispute and based on the merits, formally recommend to the parties what in his opinion the outcome of the dispute should be. no formal recommendation is made by the ombud, indicating that all the matters are capable of resolution between the parties through the other processes.

Rulings: this is a binding, written decision by the ombud personally, in matters where the recommendation is not accepted by the parties. It is based on the material facts (which have either been agreed to or have been established on a balance of probabilities), the law and/or the codes of conduct.

the co again did not make any rulings in 2011, which is regarded as very positive, as it demonstrates a willingness by credit providers, credit bureaux, debt counsellors and payment distribution agents to resolve disputes raised by consumers.

Graph 11A: Credit Info department: Current YearB

A

A

B

a - Intervention 58,16%B - Facilitation 41,84%

Graph 11B: Non-Bank Credit department: Current YearC

B

A

B

C

A

a - Intervention 41,67%B - Facilitation 58,25%c - Mediation 0,09%

Graph 11C: debt Counselling department: Current Year

B

A

A

B

a - Intervention 54,89%B - Facilitation 45,11%

Page | 23

0,0

0,2

0,4

0,6

0,8

1,02011

2010

121-18061-1200-60

86%

79,7

9%

11%

20,0

2%

3%

0,14

%

0,0

0,1

0,2

0,3

0,4

0,5

0,6Credit granted

Population

Complaints

F/St

ate

N/C

ape

N/W

est

Mp

umal

ang

a

Lim

po

po

E/C

ape

KZN

W/C

ape

Gau

teng

54%

46%

18%

14%

9%13

%

9%19

%13

%

5%13

%7%

4%11

%4% 4%

7% 6%

4%7%

4%

1% 2% 2%

6%

4%13

%

K

J

I

H

G

F

E

D

C

B

A

A

B

C

D

E

F

GH I

J K

Graph 12: How consumers heard about the Credit Ombud

Description %

a - Media (newspaper, radio, magazine, tv) 24,15%

B - Word of mouth 19,00%

c - credit bureau 17,83%

D - Internet 14,11%

e - credit grantor 13,28%

F - other 3,90%

G - ncr 3,44%

h - attorney 2,02%

I - Brochure 0,98%

J - educational talks 0,72%

K - telkom 0,58%

Total 100%

Complaints/population/credit granted per province

complaints population credit granted

Productivity

2010 2011

In 2011 we concluded 79,79% of all cases within 60 days, compared to 86% in 2010.

20,06% of the cases were concluded between 61 and 120 days.

0,14% of cases were concluded between 121 and 180 days.

Page | 24

over the past financial year, the office of the credit ombud has once again been instrumental in transforming the lives of many more individuals and organisations by mediating in the pursuit of credit extension conflict resolution. By taking its cues from nature and consolidating its systems and resources, the credit ombud will continue to serve its stakeholders in a professional and ethical manner, maintaining the highest standards of honesty and confidentiality.

conclusIon

Page | 25

credit ombud

tel: +27 11 781 6431

Fax: +27 11 388 2445

call centre: 0861 662 837

email: ombud@creditombud.org.za

postnet suite # 123

private Bag X10015, randburg, 2125 1st Floor, silver Fern Building

Fernridge office park

5 hunter street

c/o Bram Fischer rd

Ferndale, randburg

www.creditombud.org.za

centralised helpline: 0860 662 837

In south africa, ants help in the cultivation of rooibos tea. rooibos seeds are small,

and widely dispersed, making collection difficult for humans. Black ants find these

seeds and store them in their nests, however, making them easier for humans to

collect in one place. one nest may contain up to 200 grams of rooibos seeds.

Page | 26