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IN THE NATIONAL CONSUMER TRIBUNAL

HELD IN CENTURION

Case number: NCT/13914/2014/57(1)(P) NCA

In the matter between:

THE NATIONAL CREDIT REGULATOR............................................................APPLICANT

and

AMANDA JOHNSON.........................................................................................RESPONDENT

Coram:

Adv N. Sephoti – Presiding Member

Prof. T. Woker – Panel Member

Adv F. Manamela – Panel Member

Date of Adjudication – 14 July 2014

JUDGMENT AND REASONS

APPLICANT

1. The Applicant in this matter is the National Credit Regulator, hereinafter referred to as the NCR,   a body established in terms of Section 12 of the National Credit Act (the “NCA” or the “Act”) (hereinafter referred to as “the Applicant”).

RESPONDENT

2. The Respondent is Amanda Johnson, a major female and also a Debt Counsellor duly registered with the Applicant under registration number NCRDC 1080 since 14 July 2009 (Hereinafter referred to as “the Respondent”).

APPLICATION

3. This is an application in terms of section 57(1) of the National Credit Act, 34 of 2005 (hereinafter referred to as “the Act”) for the cancellation of the Respondent’s registration in terms of the Act, resulting from the Respondent’s alleged repeated contravention of the Act and its Regulations.

RELIEF SOUGHT

4. The Applicant seeks the following relief:

4.1 Cancellation of Respondent’s registration as a Debt Counsellor , in terms of section 150(g) read together with section 57(1)(a) and (c) of the Act;

4.2 Declaring the Respondent to be in repeated contravention of section 52(5)(c) of the Act read with the Respondent’s conditions of registration, Part A, clauses 1, 2 and 5;

4.3 Declaring the repeated contraventions by the Respondent , in terms of section 150(a) of the Act, to be conduct which is prohibited in terms of the Act; 

4.4 Any other appropriate order required to give effect to the consumers’ rights in terms of section 150(i) of the Act.

BACKGROUND

5. Applicant registered Respondent as a Debt Counsellor with effect from 14 July 2009 subject to General and Specific Conditions of Registration.

6. Applicant alleged that Respondent, in the past and at present, repeatedly contravened the Act.

7. Respondent’s past contraventions related mainly to :

7.1 A display of conduct deemed to be unprofessional in allowing her debt counselling registration to be used by various individuals to attract and retain new consumers for the business;

7.2 A submission of false information on a legal document in that the Respondent attested to legal documents in which she swore under oath that she consulted with the consumer and practised in Bellville, Cape Town whereas in all instances that this oath/affirmation was made, the Respondent was not practising nor situated in Bellville but rather in Port Elizabeth;

7.3 The untimely assistance to consumers that was rendered by the Respondent.  This aspect is tied in with the contravention of unprofessional conduct in that the Respondent had a vast number of consumers listed under her name from various branches of the DRS franchise, most specifically DRS Tygerberg and Morningside branches and the fact that Ms E Mtshali, owner of a DRS franchise, sought to be registered as a debt counsellor only because of the delay from the Respondent in performing her duties and responding to consumer queries.

8. Applicant brought this current application to the Tribunal for the cancellation of Respondent’s registration, alleging that Respondent engaged in repeated and further breaches of the Act, the Regulations, and the Respondent’s conditions of registration.

What constitutes repeated contraventions in terms of section 57(1) of the Act?

9. Section 57(1) of the Act provides that a registrant’s registration may be cancelled by the Tribunal upon application by the Regulator (Applicant in this matter) if the registrant (Respondent in this matter) repeatedly fails to comply with any condition of registration and contravenes the Act.

10. The meaning of repeated contraventions have been considered by the Tribunal on a number of occassions, most prominently in the cases of NCR v Petrus Martinus Ferreira[1] and NCR vs JW Van Zyl[2] wherein the Tribunal held that the registrant had repeatedly contravened the Act, Regulations and Conditions of Registration where it engaged in similar contraventions in respect of multiple consumers.

APPLICANT’S CASE

The Applicant’s case rests on three pillars that according to Applicant, warrants cancellation of the Respondent’s registration and these are 1:  unprofessional conduct;  2:  submitting false documents and 3:  not rendering timeous service to consumers.

11. Applicant contends that professional conduct speaks to the core of the duties of holding office of a debt counsellor.  The conditions require of a debt counsellor to render services of the highest objectivity and good faith.  They are expected to balance the interests of all parties to the debt review process while maintaining fairness and honesty at all times.  According to the Applicant, this is deemed to be professional conduct.  Thus, holding the office of a debt counsellor and giving effect to the purpose and requirements of the Act, a duty of care is placed on the debt counsellor. A breach of this duty is deemed to be a transgression and one which would attract punitive repercussions.

12. Further it is alleged that the Respondent had not provided services in a timely manner nor could her conduct be said to be professional.  Applicant challenges that the Respondent had consulted with and provided personal assistance and or debt counselling services to each of the 1394 (one thousand three hundred and ninety four) consumers that were registered under her name on or about the period of July 2010.  It is alleged that at one point, the Respondent had consumers from 13 (thirteen) DRS branches across the country registered under her name on the Applicant’s online DebtHelpSystem.

13. The conduct of the Respondent in not replying timeously to consumer queries that were raised by Mtshali who was the Morningside DRS franchise owner could not be said to be professional.  For the record, it needs to be mentioned that Mtshali was never at any stage a consumer but was instead a DRS franchise owner.

14. Applicant concedes that while the conditions of registration do not expressly prohibit the use of a debt counsellor’s NCRDC number by other individuals, contextually, the words “act professionally and reasonably” should be interpreted to mean that the NCRDC number is for the registrant’s sole and exclusive use for legitimate and lawful purposes because leaving it unchallenged could lead to absurdity and abuse of authority.

15. It is further alleged that due to the large number of consumers registered against the Respondent’s name, she could not simultaneously render assistance at all the DRS branches which left one with the conclusion that unregistered persons, with no training or knowledge of debt counselling services were left to assist consumers.

16. Respondent further submitted evidence on a sworn document being applications to court in terms of section 86(7)(c) for a debt restructuring order, wherein she stated that she practised at DRS Tygerberg in Bellville and that she had consulted and informed consumers of the process and made a recommendation that the debt of the consumer be restructured.  Applicant contends that it is impossible to be based in Cape Town and to render services to consumers in Bellville or if that happened it would have been telephonically or by email but not in person;

RESPONDENT’S CASE

17. Respondent admits that she is a registered Debt Counsellor with registration number NCRDC 1080 and that she was at the time of the alleged contraventions of the Act and conditions of registration, employed by DRS which sold debt counselling franchises and operated from various sites across the country;

18. DRS Holdings’ Directors at the time were Vinesh Naidoo, Raynard McLaren, David Marston, Craig de Lange and Kent Williams;

19. Respondent claims that she was informed by her employer at the time, DRS Holdings, that there was a backlog at the Applicant’s offices with the registration of Debt Counsellors and thus she was to assist all the people in the office using her registration number whilst Applicant was sorting itself out;

20. Respondent and her employer made a trip to the Applicant’s offices and met up with Bongi Radebe where this arrangement was repeated but was never reduced to writing and continued in the DRS offices;

21. It is also stated that the arrangement was that this practise will continue in relation to debt counsellors who had written their exams and passed but were awaiting their registrations.  The Applicant’s manager or person responsible for registrations was aware of the arrangement as every new debt counsellor that was registered had to go through him;

22. It is further put on record that the DRS franchise in Tygerberg had an office in Port Elizabeth where the Respondent was stationed and operated from.  Furthermore, there was a registered debt counsellor at the Tygerberg office, Ms Lakey and was stationed there so consumers at both offices were attended to by competent and registered debt counsellors;

23. Respondent further set out that she had skype and telephonic conversations with the offices in Morningside and in those offices, the debt counsellors, until registered were information collectors and all other procedures had to be in place before a consumer could be registered on the database;

24. Respondent’s representative contended that the Applicant claims there was prejudice suffered by the consumers yet there is nothing on file that supports this allegation.  The complaint of Ms Mtshali is also suspect as she was complaining as a franchisee that was not making money if there were any delays in the process from whichever quarter.

25. It also needs to be put on record that the Applicant is seeking the deregistration of a registered debt counsellor who from date of registration has had a clean audit, including the period during and after the investigation. The Applicant then went ahead and registered Ms Mtshali, who had bought a franchise when she was not even a registered debt counsellor but only sought it as a business opportunity to further her business interests.

26. Respondent referred the Tribunal to correspondence between herself and Mr Radebe who did not dispute that the arrangement as explained by Respondent never existed.  He chose not to be part of the proceedings as he is currently running debt counselling services and is now also registered with Applicant;

The sufficiency of the evidence

27. Respondent put forward a view that Applicant relied too heaviliy on too little evidence. The Respondent submitted that Applicant has failed to prove that the arrangement with Mr Bongani Radebe did not exist.  Mr Radebe in the correspondence with Respondent, did not dispute such an arrangement but asked that he be left out of the matter as he was also now a registrant with the Applicant. 

28. Applicant had also telephonically had a conversation with him and again he neither confirmed nor denied the existence of such an arrangement as was described by the Respondent. 

29. Applicant has not denied that the DRS franchise in Tygerberg has an office in Port Elizabeth which could explain Respondent operating and assisting consumers from her Port Elizabeth base.

30. Further there is no evidence from a single consumer who complained of untimely service or sloppy work by the Respondent in the investigation undertaken by the Applicant.  Instead the complaint came from a franchise owner who, herself, was not even a debt counsellor but was worried about her investment in the DRS franchise and the slow pace of progress on the files.

31. Paragraph 4.11 of the Respondent’s heads of argument, on page 10, states that “while the conditions of registration do not expressly prohibit the use of a debt counsellor’s NCRDC number by other individuals, contextually, the words “act professionally and reasonably” should be interpreted to mean that the NCRDC number is for the registrant’s sole and exclusive use for legitimate and lawful purposes because leaving it unchallenged could lead to absurdity and abuse of authority”.  This is the Respondent’s interpretation currently but there is nothing that was put forward that disproves the arrangement allegedly agreed upon with Applicant’s representatives at the time and the stipulation that at least the debt counsellors must have written and passed their  examinations;

Establishing the requirements of the contraventions in terms of the Act

32. Applicant submitted that the alleged transgressions occurred repeatedly,  were serious enough to warrant deregistration and is conduct that should not be condoned by the Tribunal as this will be seen by other debt counsellors as authority to engage in similar behaviour and that this conduct has brought the debt counselling industry into disrepute;

33. Respondent on the other hand, has co-operated fully with the Applicant’s investigation and provided an explanation of the arrangement that existed at the time of the alleged contravention i.e. allowing other debt counsellors to use her registration numbers, an arrangement which the Applicant has not been able to refute;

34. It has taken Applicant 2 (two) years to start and conclude the investigation and bring the matter to the Tribunal whereas they also confirm that the Respondent has been an exemplary debt counsellor over the years and has, during and after the investigation, had a clean audit.

35. No evidence was tendered to show that Respondent violated the trust of any of the consumers who sought her services – there is no single complaint on file in the papers before the Tribunal and Respondent left the employment of DRS years ago and Applicant at date of this hearing had not taken any action against DRS for selling debt counselling franchises to unregistered persons who see this as a purely business opportunity;

Consideration of declaring the actions of the Respondent as prohibited conduct

36. Firstly, it is quite clear from the Act that prohibited conduct is differentiated from offences. The Act proscribe prohibited conduct and offences. Prohibited conduct is defined “as an act or omission in contravention of the Act, other than …  offences under the Act”.

37. The Act allows for administrative fines in respect of prohibited or required conduct in terms of the NCA or the CPA. [3] Section 160 of the Act contains provisions regarding offences against the Regulator and the Tribunal. Throughout the Act, references are made to specific conduct or omissions constituting offences. Section 161 sets out the sanctions for offences committed in respect of the Regulator, the Tribunal and in terms of the Act.

38. Applicant’s inspector, Mr Koketso Tlou, in his report dated 28 June 2012, recommended that DRS be issued with a compliance notice in terms of section 54 instructing them to desist from selling franchises to individuals who are not NCR registered debt counsellors and /or allowing anyone else to perform services where an NCR registered debt counsellor’s discretion is required;

39. He further recommended that compliance notices in terms of section 55 of the Act be issued to Lupoko, Fish and Johnson informing them that, even though they may use administrative and fact finding assistance, they may not use anyone else to perform services where an NCR registered debt counsellor’s discretion is required.

CONSIDERATION OF EVIDENCE BEFORE THE TRIBUNAL:

40. This matter involves an application for the deregistration of a debt counsellor essentially on the basis that her registration number was used by a number of other debt counsellors in order that matters could be taken to various magistrate's courts for finalisation.  These other debt counsellors were not registered at the time and that is why the registration number of the Respondent was used. 

41. The Applicant is understandably concerned about such a practice because although the conditions of registration do not refer specifically to such a practice, the practice does undermine the purpose and intention of the Act.  If such a practice were to be condoned by the Applicant, there would be no reason for debt counsellors to register and be monitored by the Applicant as they could just resort to using someone else's registration number.

42. That being said, this is an application for deregistration of this particular debt counsellor.  Such deregistration would have serious consequences for the Respondent as she would for all intents and purposes lose her livelihood.  Having considered all the evidence before the Tribunal and after much consideration the Tribunal declines to grant the application for deregistration for the following reasons:

42.1 These events occurred more than two years before this application was bought to the Tribunal and the Respondent was at the time of the alleged offence, employed by DRS and has since left their employment and has not repeated this practice.  There is nothing before the Tribunal to suggest that at this point in time the Respondent is acting contrary to her conditions of registration.  At the time of the investigation, the inspector suggested that a compliance notice should have been served on the Respondent to ensure that the practice ceased.  This, in the Tribunal's view, given the circumstances of this particular case, would have been an appropriate approach.  As the practice has now ceased, the Tribunal is of the view that it would not serve any purpose to issue a compliance notice however; the Respondent is warned against adopting such a practice in the future as this would in all probability lead to serious consequences.

42.2 It appears that this was a practice which was suggested by an employee of the Applicant (who has now left the Applicant's employment and is himself working as a debt counsellor) in order to deal with a back log of debt counselling cases.  It seems that at the time, the Applicant was struggling to register debt counsellors even though they had passed their exams.  The Applicant does not accept that in fact one of its own employees would have suggested such a practice and has asked that the Tribunal not accept this version of the Respondent.  However, both the Applicant and the Respondent have attempted to get the ex-employee to explain his conduct to the Tribunal and the ex-employee has declined to do so on the basis that this might jeopardise his present relationship with the Applicant.  The Tribunal considered at length whether it would take this matter any further for it to call the ex-employee to explain his position.  The Applicant has requested that the Tribunal subpoena the ex-employee to come and explain what actually took place.   In the end the Tribunal decided that it would not take this matter any further because it would in any event have to approach his evidence with caution and in all probability he would be a reluctant and even hostile witness.  In the circumstances the Tribunal decided to consider the matter based on the evidence before it.

42.3 The Respondent has explained why she allowed her debt counselling number to be used by other as yet unregistered debt counsellors.  Her version is also supported by four (4) other Debt Counsellors. The ex-employee of the Applicant has refused to explain his conduct one way or the other.  It is noted by the Tribunal that at the time, the role of a debt counsellor was still evolving and the parties may not have appreciated the seriousness of their conduct.

42.4 The Applicant has accepted, that if indeed there was such a practice in place, it would not have applied for the deregistration of the debt counsellor but would in all probability have adopted some lesser form of remedial action. The view of the Tribunal is that any form of conduct that frustrates the implementation of the Act, or is conduct unbecoming of the practise that the Act seeks to promote, falls foul of the intentions of this Act, and is as a result, prohibited conduct.  Prohibited conduct is described as “an act or omission in contravention of this Act”.  The purpose of this Act is amongst others “providing for a consistent and harmonious system of debt restructuring, enforcement and judgement . . .”

43. Applicant has to date, not taken any action against DRS for what Applicant describes as unbecoming conduct in that years after debt counsellors have left the services of DRS, Applicant is waking up to the fact that it should have taken action.  The debt counsellor in question is however no longer in the employ of DRS and have moved on,  continued practising and doing it in line with the Act with no transgressions to correct.

44. In this case, it has taken the Applicant two years after an investigation to bring the matter to trial. It is not desirable to keep matters hanging for a lengthy period of time especially if Applicant wants people who are governed by the Act and consumers to understand that Applicant takes transgressions of the Act seriously.

Conclusion

45. In the circumstances of this particular matter, whilst the Tribunal fully endorses the approach of the Applicant that allowing a debt counsellor's registration number to be used by other as yet unregistered debt counsellors is an unacceptable practice which undermines the purposes of the NCA, the Tribunal refuses the application for deregistration. The Debt Counsellor is however found to have engaged in prohibited conduct.

46. Applicant conceded that Respondent has never been found to be in contravention of the Act; her debt counselling practice has been run according to the rules and processes since she left DRS and there has never been any complaint filed against her or her practise from the time she was at DRS to the time of the hearing of this matter. In fact, Respondent has had a clean audit during and after the investigations and the Applicant’s investigation has failed to yield a single consumer who could substantiate the claims of prejudice allegedly suffered by consumers under the Respondent’s care. It is also for these reasons that the Tribunal does not impose an administrative penalty against the Respondent.

47. The debt counsellor is however warned against engaging in such conduct in the future.

48. For the reasons set out above the Tribunal makes the following order:

a. Applicant’s application for the cancellation of the registration of the Respondent is refused.

b. No order as to costs is made.

This done and signed at Centurion on this the 8^th day of December 2014.

[signed]

Adv HFN Sephoti

Presiding member

Prof T Woker (Member) and Adv F Manamela (Member) concurring.

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