For countless South Africans drowning in debt, a debt counsellor is meant to be a lifelinea trusted guide to help them regain financial stability. But the industry itself is now under the microscope, with a major push underway to weed out the bad actors and restore public trust.
The National Debt Counsellors’ Association (NDCA) has submitted a landmark proposal to the government, calling for a radical overhaul of the standards required to become a debt counsellor. The goal is to introduce stricter “fit-and-proper” requirements that would bring the sector in line with the rest of the financial services industry.
Why the Sudden Push for Accountability?
The proposal stems from a simple, powerful belief: those who hold the financial futures of vulnerable people in their hands must be beyond reproach.
René Moonsamy, the newly elected chairperson of the NDCA, put it starkly: “Arguably, the debt counselling licence is the single most important financial services licence granted in South Africa.” This is because practitioners work with individuals at their most financially fragile, making trust and integrity non-negotiable.
The Four Pillars of the Proposed Clean-Up
The NDCA’s plan is built on four key changes designed to professionalize the industry:
-
Higher Barriers to Entry: Gone would be the days of low minimum qualifications. The proposal calls for more relevant experience, formal apprenticeships, and continuous professional development to ensure counsellors are truly equipped for the complex task.
-
Rigorous Vetting: Prospective debt counsellors would face thorough background checks to screen for past convictions involving fraud, dishonesty, or financial misconduct. Crucially, this “fit-and-proper” test wouldn’t be a one-time event but an annual assessment to maintain their license.
-
Proving Business Competence: Counsellors would need to demonstrate that their own business is financially stable and has the proper resources and processes in place. This ensures they can’t offer sound advice to clients while their own practice is crumbling.
-
Clear Supervision: Mirroring the insurance industry, the proposal suggests a formal supervision period where experienced, registered debt counsellors would mentor “debt counsellors in training,” ensuring proper guidance before they operate independently.
Aligning with Broader Financial Standards
The NDCA wants to embed the sector within the broader framework that governs other financial institutions. This includes adopting principles from the pending Conduct of Financial Institutions (Cofi) Bill and mandating the six Treating Customers Fairly (TCF) principles.
This move would create uniform standards across finance, improve consumer protection, and force a more transparent, customer-centric culture in an industry where the stakes for clients are incredibly high.
The proposal is now with the Department of Trade, Industry and Competition and the National Credit Regulator. If adopted, it could mark a turning point, transforming debt counselling from a Wild West into a respected, reliable profession that truly serves as the lifeline it was meant to be.
{Source: SundayWorld}
