Borrowers are invoking their rights against unscrupulous lenders and debt counsellors.

A greater awareness by consumers around their rights when it comes to borrowing money has led to an increase in complaints related to non-bank credit transactions, with the majority of rulings going in the favour of the customer, says the Credit Ombudsman, Manie van Schalkwyk, in his annual report for 2012, released recently.

Non-bank credit transactions include credit agreements with furniture and retail credit providers, loans from micro-lenders, and credit providers other than banks.  Disputes against these credit providers mostly related to issues such as garnishee orders, service issues, and disputes around the accuracy of the statement of account which shows what the customer still owes.

“We experienced an increased  demand for our services in 2012, opening a total of 5,506 disputes across all departments, an increase of 14% as compared to the previous year and we finalised 5,140 disputes with 53 per cent resolved in favour of the consumer,” says Van Schalkwyk.

The Ombud found that when it comes to debt counselling matters, the biggest contributing factor that led to complaints in debt counselling matters, was the debt counsellor’s failure to communicate with consumers.

Another major issue was around debt counsellors absconding or closing businesses, leaving the consumer with nowhere to turn while being faced with the possibility of their houses or cars being repossessed and auctioned off as a result of credit providers not receiving their payments.

The Ombud also raised concerns about disputes around credit information, particularly around fraud cases as “identity fraud appears to be rampant as more consumers make use of online and cellphone transactions,” says Van Schalkwyk.

Consumers in credit

The latest statistics from the NCR show that the number of credit accounts increased to 70.73 million, with 18.31 million of these accounts being impaired or in arrears.

“This is an indication that consumers’ credit wellbeing is on a downward spiral. More cash- strapped South Africans may find it increasingly difficult in the next year to access credit due to a lack of affordability on the one hand and impaired credit records on the other,” comments Van Schalkwyk.

“There are still thousands of consumers who have disputes with their credit providers over accounts and who need our assistance to have the disputes resolved, so that the credit relationship can continue. At the same time, just as many consumers have disputes about the information listed on the credit bureaus and they need someone to assist them to resolve these disputes, ” says Van Schalkwyk.