Task Team Agreement

Minus18 Debt Counselling

oThe Debt Counselling process commenced in June 2007 with an Act with a limited process or system.

oThere were many implementation challenges.

oTask Team Agreement was approved in 2010.

oTask Team Agreement includes:

- Process timelines and responsibilities (Annexure A)

- Process enhancements (Annexure A)

- Debt Counsellors Assessment Guidelines (Annexure B)

- Debt Counselling System Guidelines (Annexure C)

- Debt Restructuring Rules System DCRS (Annexure D)

- Standard Forms (Annexure E)

oCIF reviewed the Task Team Agreement based on industry input.

oAll members of CIF approved the Task Team Agreement.

oNCR has issued the Task Team Agreement as Guidelines in January 2015.

oAll NCR Registrants are requested to comply.

oCourts are requesting copies of the Task Team Agreement.

Minus18 Process Enhancements

Process re-defined to achieve consensual resolution where possible:

oDC's required to submit proposals with assessment outcome (TT A 2.3.5(b)).

oCP's to consider and respond (agree if eligible and rules solve the case) (TT A 2.3.11 (a) & (b)).

oDCRS to validate integrity of proposals submitted by DC's (TT Annexure D).

oLess contested Court applications (TT A 2.5.6).

Standard Forms:

oCertificate of Balance (COB) (TT Annexure E).

oOver-indebtedness assessment summary (for 17.2 stage) (TT Annexure E).

oCancellation of Debit Orders & Salary Stop Orders (TT A 2.3.10).

oDebt restructuring proposal (TT Annexure E).

oPDA payment plan (Provisional and summary repayment plan) (TT Annexure E).

oCredit Provider responses (Letter of acceptance of arrangement proposal,

oLetter of decline of proposal) (TT Annexure E).

Minus18 Purpose of Presentation

To provide practical Task Team Training with reference to:

oDebt Review Process.

oDebt Review Process Obligations.

oDebt Review Process Time-lines.

oDebt Counsellors Affordability Assessment.

oDCRS.

Minus18 Debt Counselling Partnership

Minus18 Debt Review Process

Minus18 Step 1: Application

oConsumer who cannot meet his or her monthly commitments can apply for Debt Review by completing Form 16. This may also be as result of receiving Section 129 Notice.

oIn addition to the information prescribed in the NCA a Form 16 should include the following information:

oDetails of applicable fees as per NCR Debt Counsellor Fee Guidelines.

oConsequences of direct payments as set out in terms of NCR Withdrawal Guidelines 002/20015 paragraph 5.2.

oConsumers should also be provided with Debt Review information document as set out in the Debt Review Task Team Agreement Guidelines (TT A 3.3.2).

Minus18 Step 2: Assessment, eligibility and acceptance by DC

Consumer is eligible (qualify) for Debt Review if the following conditions are met:

oAll income and debt obligations included.

oMarital status declared, verified and applied accordingly (TT B 2.1 & 2.2).

oReasonable repayment plan is possible.

Ø First aim is DCRS solve. Use the benefits of DCRS as selling tool to increase affordability amount.

Ø If DCRS solve is not possible the repayment plan has to

be reasonable.

Ø No income means no Debt Review unless loss of income is

temporally (2 to 3 months). Source of future income to be known (TT B 1.5 & 2.4).

Ø No payment holiday (TT A 3.3.1).

oFull disclosure of household income as set out in Section 78(3) to be declared in all applications especially if living together or married ANC and the other party is not applying for Debt Review (TT B 2.3).

oCopy of payslip or proof of income (bank statements) essential (TT B 4.2).

oAssessment to be conducted in line with Debt Review Task Team Agreement Guidelines Annexure B.

oCompliance to Debt Review Task Team Agreement Guidelines Annexure B prerequisite to qualify for DCRS concessions.

oOnce assessment is finalized the Debt Counsellor may accept the Debt Review application in terms of Section 86(6) of the NCA.

oInsurance premiums for assets financed as well as other insurance to be included in household budget (TT A 2.3.9).

Minus18 Step 3: Notification Form 17.1(b)

oOnce DC has accepted the Debt Review application the DC has to:

oWithin 5 days notify all Credit Providers in prescribed format (TT A 2.3).

oUpdate NCR Debt Help System.

oSubmit Form 17.1 to Credit Providers (This is a request for Certificate of Balance (COB).)

Minus18 Step 4: Certificate of Balance (COB)

oCP to supply COB to DC:

oWithin 5 days of receipt of Form 17.1 (TT A 2.2.1).

oIn prescribed format as agreed in the Debt Review Task Team Agreement Guidelines.

oCOB to include consent to service.

oCOB to include confirmation that debt has not prescribed as per CIF decision on the 1st of May 2015.

oIf CP fails to provide COB within 5 days a DC should notify CP's that the information supplied by the Consumer will be used as per Regulation 24(4) (TT A 2.3.2).

oCompliance to the agreed timelines enables that the correct balance be used. Non-compliance to agreed timelines leads to future disputes.

oCOB balance is not updated during the Debt Review process. The aim of Debt Review is to repay COB value. End balances to be paid at the end of Debt Review (CIF).

Minus18 Step 5: Form 17.2

oDC is required to make determination of over-indebtedness as per Section 86(6) and within 10 business days upon receipt of COB's (TT A 2.3.5):

oa. Notify CP's by submitting Form 17.2 with one of the following findings:

Ø Consumer not over-indebted (Form 17.2(a)).

Ø Consumer is not over-indebted but experiencing difficulties to meet debt obligations (Form 17.2(b)).

Ø Consumer is over-indebted (Form 17.2(b)).

oUpdate NCR Debt Help System status.

oInclude Debit Order cancellation request (TT A 2.3.10).

oCredit Provider required to cancel Debit Order as required related to a credit agreement (TT A 2.3.10).

oA Debit Order cancellation request should include the Client name, ID number, credit agreement account number and Client signature.

oDebit Order cancellation per credit agreement, with the required information as set out above, has to be submitted to each Credit Provider. Sending a Debit Order instruction to Consumers account holder is ineffective and cannot be implemented.

Minus18 Step 6: Repayment Proposal

oRepayment proposal based on the affordability amount as per Affordability Guidelines (TT A (B)).

oAlways test for DCRS solve first. Increase affordability where possible to obtain DCRS solve.

oIf DCRS solve is not possible repayment proposal to be reasonable and Section 103(5) to be applied (TT C 2.5.9 & TT A 2.3.10 (d)(VII)).

oDC to submit repayment proposal on same day as submitting Form 17.2(b) (10 days after COB's has been received) (TT A 2.3.5).

oProposal to include income and expenditure summary (TT A 2.3.6 (a)).

oConfirmation of assets can be sold to reduce over-indebtedness (TT A 2.3.6 (b)).

oRepayment amount (TT A 2.3.6 (c)).

oAppointed PDA (TT A 2.3.6 (d)).

oProposal to include insurance payment as declared on COB

oProposal to include date of first payment (TT A 2.3.6 (e)) & (CIF).

oDC to submit repayment plan to PDA which include cascading (TT A 2.3.10(e)).

oCP to respond on repayment proposal within 10 days from receipt of repayment proposal (TT A 2.3.10).

oIf DCRS solves CP required to accept (TT A 2.3.11(a) & TT D).

oIf Repayment proposal include mistake CP can request rework. (TT E-Letter of Decline).

oOn non DCRS proposal the CP can:

Ø Accept

Ø Decline

Ø Issue counter proposal

oApply Section 103(5) on non DCRS proposals (TT A 2.3.10 (b)(II) & TT A 3.3.10 (VII) & TT C 2.5.9).

Minus18 Step 7: Summary Repayment Plan

oWithin 10 days of receipt of proposal response the DC should (TT A 2.3.10):

oRecord acceptance and non-acceptance of proposals (TT A 2.3.10 (a)).

oDCRS acceptance must be based on accepted DCRS proposal.

oCreate a final repayment plan including consent and non-consent. Allocated repayment amount, contractual terms and Section 103(5) used where non-consent or no reply received (TT A 2.3.10 (b)).

oFinalize summary repayment plan and submit to CP's (TT A 2.3.10(C)).

oInclude summary repayment plan in Debt Review Court Application (TT A 2.3.10 (d)).

oSubmit updated repayment plan to PDA (TT 2.3.10 (e)).

Minus18 Step 8: Update CP Systems

Minus18 Step 9: Set Down (File in a Court)

Minus18 Step 10: Hearing

Minus18 Step 11: After Care

Minus18 Step 12: Paid up confirmation

Minus18 Step 13: Clearance Certificate Form 19

Debt Counselling Process in Simplicity

Minus18 Debt Review Process Obligations

The Debt Counselling process is set out in the NCA and Regulations.

The following process weaknesses were identified:

oProcess and format of Certificate of Balance (COB) (TT Covering Report 3.1.2.1(a)).

oDebt Counselling Affordability Guidelines (TT Covering Report 3.1.2.1(b)).

oFormulation of repayment proposals (TT Covering Report 3.1.2.1(c)).

oPayment distributions by PDA's (TT Covering Report 3.1.2.2).

oOperational compliance (TT Covering Report 3.1.3).

The Debt Counselling process enhancements as set out in Annexure A of the Debt Review Task Team Agreement Guidelines

oDC to issue Form 17.1 within 5 business days of acceptance (TT A 2.2.1).

oIf no COB is received within 5 business days DC to issue Reg 24(4) Notice to CP's and accept info provided by the Consumer (TT A 2.3.2).

oCOB balance is not updated during the Debt Review process. The aim of Debt Review is to repay COB value. End balances to be paid at the end of Debt Review (CIF).

oWithin 10 days of receiving COB the DC should complete the Affordability

oAssessment and issue Form 17.2 (a or b) (TT A 2.3) and repayment proposal (TT A 2.3.5).

oWhen Form 17.2 is submitted the DC should also submit Debit Order cancellation form per credit agreement to each Credit Provider (TT A 2.3.6(f)).

oCP to respond to repayment proposal within 10 days of receiving proposal (TT A 2.3.10).

oDC to record CP response within 10 days of receiving proposal response and create summary repayment plan (TT A 2.3.10).

oDC to submit repayment plan to Magistrate Court indicating acceptances and non-acceptances (TT A 2.3.10(d)).

oDC to submit repayment plan to PDA which includes cascading (TT A 2.3.10(e)).

Reasons why COB balance is not updated during the Debt Review process

oThe aim of Debt Review is to structure a debt repayment based on the COB value or information supplied by the Consumer in terms of Regulation 24(4).

oAll parties are required to comply with Task Team Agreement time-lines to avoid future disputes.

oThis repayment plan is based on consensual repayment terms and/or Court approved repayment plan.

oThis means minimum repayment amount set in stone by Court Approval.

oIf outstanding amount on any credit agreement is increased after COB a new payment plan is required. If the affordability remains constant the debt where value has been updated will receive an increase payment and all the other debt will receive a lower repayment.

oIf payments are reduced below Court Order CP can commence with legal action.

oIf value of one credit agreement is increased that credit agreement will receive preferential treatment.

oFor the reasons above repayments are structured based on the information available at a point in time and the aim of Debt Review is not to balance the outstanding balance with CP.

oIn Debt Review there will always be end balance differences and this can only be addressed at the end on the Debt Review process.

oThe Consumer is required to repay the full debt and not only the amount of the Court Order.

Credit Provider obligations set out in Annexure A of the Debt Review Task Team Agreement Guidelines

oOn receipt of Debit Order cancellation form received with Form 17.2(b) cancel Debit Order and salary deductions (TT A 2.3.10).

oWithin 10 days of receiving DCRS repayment proposal accept proposals that solve or request DCRS rework (based on mistake) and on non-DCRS proposals accept, decline or issue counter proposal (TTA2.3.11).

oNot terminate a Debt Review after receiving F17.2(b) on a solved DCRS proposal where Consumers is making payments and has not breached material provisions

o(TT A 2.4.1).

oUse best endeavours to verify and allocate repayments (TT A 2.4.2).

oNot terminate if Consumer is not in default with agreed repayment plan and payment of credit linked insurance (TT A 2.4.3).

Legal Contestation obligations set out in Annexure A of the Debt Review Task Team Agreement Guidelines - Debt Counsellor:

oSet down (file) matter before expiry of 60 business days and notify all parties within 10 business days of having obtained it (TT A 2.5.1 & TT A 2.5.4).

oWhere full agreement was obtained on repayment proposal obtain Consent Order (TT A 2.5.2).

oIn absence of full agreement set matter down in Magistrate Court (TT A 2.5.3).

Legal Contestation obligations set out in Annexure A of the Debt Review Task Team Agreement Guidelines Credit Providers:

oOnly oppose on material grounds (TT A 2.5.6(a)).

oEnsure that their Attorneys are aware and comply (TT A 2.5.6(b)).

Conduct in the Debt Review process set out in Annexure A of the Debt Review Task Team Agreement Guidelines Debt Counsellors:

oDo not offer or allow Consumer payment holiday (TT A 3.3.1).

oProvide Clients with brochure and information to explain Debt Review process, benefits and consequences (TT A 3.3.2).

oIf reasonable repayment is not possible reject Debt Review application (TT A 3.3.3).

oObtain full and correct Client details on application (TT A 3.3.4).

oFollow and implement all steps as set out in Task Team Agreement (TT A 2.3.5).

oMonitoring Client non-payment (TT A 3.3.6).

Conduct in the Debt Review process set out in Annexure A of the Debt Review Task Team Agreement Guidelines Credit Providers:

oEnsure administrative co-operation (TT A 3.4.1).

oImplement policies to comply with Debt Review process and DCRS (TT A 4.4.2).

oCancel duly authorized Debit Orders and Stop Orders when so requested (TT A 3.4.3).

oTerminate Debt Review where payments are not made within provisions of the NCA (TT A 3.4.4).

oOnly oppose Court Applications on material grounds (TT A 3.4.5).

oImplement central point of contact for Debt Review matters (TT A 3.4.6).

oImplement policies to manage trade-offs of competing claims between different Product Houses (TT A 3.4.8).

Conduct in the Debt Review process set out in Annexure A of the Debt Review Task Team Agreement Guidelines Payment Distribution Agents (PDA's):

oValidate account numbers (TT A 3.5.1).

oCapture information supplied by DC correctly (TT A 3.5.2).

oInform all parties of details of payments made or not (TT A 3.5.3).

oSubmit monthly statements to Consumers (TT A 3.5.4).

oMake payment expeditiously (TT A 3.5.5).

Minus18 Debt Review Process Time Line

Maximum Response Time	Time Line	Action
Day 0	Day 0	Form 17.1
Within 5 Days from receipt of the Form 17.1	Day 5	COB
Within 10 Days from receipt of the COB	Day 15	Form17.2(b) & Debit Order cancellation instruction
Within 10 Days from receipt of the COB	Day 15	Repayment Proposal
Within 10 Days from receipt of the Proposal	Day 25	Proposal Response
Within 10 Days from receipt of the Proposal Response	Day 35	Summary Payment Plan Response
Within 25 Days from receipt	Day 60	Court Set Down

Minus18 Debt Review Affordability Assessment

Purpose of Affordability Assessment set out in Annexure B of the Debt Review Task Team Agreement Guidelines

oDC to determine if Consumer is over-indebted based on information available when assessment is done (TT B 1.1(a)).

oDC to determine if Consumers seeks declaration of Reckless Credit based on information when credit agreement was entered into (TT B 1.1(b)).

oDC to set up realistic budget for the Consumer as well as maximum possible amount to repay debt taking Consumer's budget into account (TT B 1.5(a)).

oCompliance will reduce opposition and speed up Debt Review process (TT B 1.4).

Eligibility to apply for Debt Review Annexure B of the Debt Review Task Team Agreement Guidelines

oWhere Consumer has no income or prospect of income do not accept Debt Review application (TT B 2.1 & 1.5).

oIf married COP both parties should apply for Debt Review (TT B 2.2(a)).

oIf separated but not divorced (COP) cannot individually apply for Debt Review unless joint application (TT B 2.2(b)).

oIf married ANC or living together consider joint application (TT B 2.2(c)).

oFull household income as defined in S78(3) to be used in Debt Review in Debt Review application (TT B 2.3).

oTemporary loss of income for 3 to 4 months can be accommodated if date of income resumption is known (TT B 2.4).

Dealing with assets in Affordability Assessment set out in Annexure B of the Debt Review Task Team Agreement Guidelines

oConsumer to be encouraged to complete list of assets (TT B 3.1).

oDC to refrain from valuing assets (TT B 3.1).

oIdentify assets, shares, second homes, extra vehicles that can be sold and savings to reduce debt (TT B 3.2 including subsections incorrectly numbered 3.1.1 to 3.1.8).

oEnsure insurance is in place for assets financed (TT B 3.2).

oJoint bonds are normally problematic (TT B 3.3) (CIF to issue more guidelines).

Determination of Nett Income in Affordability Assessment set out in Annexure B of the Debt Review Task Team Agreement Guidelines

oUse pay slips or bank statement 3 to 6 months (TT B 4 (a) & (b)).

oDeduct irregular income (TT B 4.4).

oDeduct statutory deductions (TT B 4.5).

oDeduct compulsory employer deductions (TT B 4.6).

oIf Consumer is self-employed need to verify all sources of income (TT B 4.7).

oSet realistic spending budget (TT B 5 & 6 & 7 & 8).

oWhere possible or required review Consumers financial position annually (TT B 10).