The Debt Collector’s Amendment bill 2016 has been published and the public are invited to comment thereon before November 30, 2015.
The Bill proposes a number of far reaching changes. Attorneys who conduct debt collection as part of their practise will be required to be registered with the debt collection Council.
Such Attorneys will now be subject to the Debt Collectors Act and be subjected to the penalties stipulated therein for improper conduct, but will also face significant reductions in what they may charge. In some cases their fees will be reduced by as much as 200%.
Collection charges, an initiation fee, service fees, default administration charges or any other charges may never exceed the unpaid balance of the principal debt at the time of default. If no summons is issued the maximum fee that can be recovered is R736.00.
Improper conduct by a debt collector and/or an Attorney [including his or her employer] includes using force or threats to use force, unfair tactics or any other similar conduct and whom he is related or has a personal relationship, threatens or intimidates a debtor, makes use of fraudulent or misleading representations which include the simulation of legal procedures, the simulation of official or legal documents, the representations as a Police Officer, Sheriff or Officer of the Court, or any similar person, or making unjustified threats, or threatens to spread false information concerning the credit worthiness of a debtor. It is also improper conduct to endeavour to collect a debt which has already prescribed.
The Bill also introduces a new category of employee to be known as a debt collector intern, who will have to serve three months training with a registered debt collector. The debt collector remains liable for the conduct of his or her intern. Contracts of internship can be ceded to other registered debt collectors.
To carry out investigations against debt collectors [including Attorneys] against whom a complaint has been lodged, the council may appoint any suitably qualified or experienced person as an inspector to investigate such complaint. The inspector is given wide powers to search premises even without a search warrant if he/she thinks it necessary.
Penalties include deregistration, suspensions, reprimands and fines up to R100,000.00. The debt collector may also have to reimburse the debtor who has been prejudiced.
An Attorney who pays an admission of guilt fine must be reported to the Law Society which will decide whether that Attorney remains a fit and proper person to continue practising as an Attorney.