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6 Consumerfair Fifth Edition 2010 Published by the National Consumer Forum FINaNCIaL LIteRaCY know your facts on debt counselling As consumers battle to recover from the Ally Mafunzwaini, Head: Absa aftermath of the financial crisis, many Customer Management, Retail Collec- are choosing to undergo debt counsel- tions, said that, as a leading financial ling to rehabilitate their financial situa- institution, Absa had a responsibility tion. This has forced creditors to review to educate employees and customers their traditional collections processes about the debt review process. The fol- and find opportunities to align with the lowing facts about debt review answer National Credit Act (NCA), 34 of 2005. some of the most important questions According to the figures released regarding the process: by the National Credit Regulator ■■ FACT: Consumers still need to pay (NCR) in July 2010, there are current- their debt while they are under debt ly more than 190 000 consumers un- counselling. An increasing number of der debt counselling and the number consumers are failing to pay their debt is growing rapidly. The debt review while they are under debt counselling. process was welcomed by most in- If a consumer fails to pay debt, credit dustry players as it was seen as a providers can terminate the debt re- cure for South Africa’s over-indebted view process and the legal collection consumers. process could then commence. However, there have been numer- ■■ FACT: Consumers still need to pay These include the debt counsellor’s bureaus once a clearance certificate as a customer and people-centred ous challenges during the implemen- their debt while they are waiting for application fee, a rejection fee, a re- has been issued by the court. organisation, Absa is committed tation process. And to address these, the creditor to approve the new pay- structuring fee, a monthly aftercare ■■ FACT: Debt counselling is not a quick to empowering its people with this the NCR set up a task team in Octo- ment proposal. After consulting a fee, legal fees, and Payment Distrib- fix but a long-term solution which re- information so that the interaction ber 2009, to identify blockages in the debt counsellor, a new payment plan uting Agency (PDA) fees. quires commitment and discipline with customers can be meaningful process and make recommendations is proposed and sent to the credit pro- ■■ FACT: While under debt counselling, from the consumer. If a consumer and factual. on how to fix the problems identified. viders. Once the credit providers have consumers will be temporarily listed decides to pull out of the process, the Bank branch staff have urged to One of the task team’s key discov- agreed to the proposal, the consumer on the credit bureaus. Consumers new payment plan agreed upon with refer any queries related to debt coun- eries was that consumers were using has to commit to the new plan and need to remember that they went the credit provider is declared null selling to the Debt Counselling Call debt counselling as an excuse not to make payment towards their debt. into debt counselling because they and void. The consumer will have to Centre on 0861 005 901. Customers in meet their financial obligations. It also ■■ FACT: There are costs that the con- were unable to pay towards their continue paying the original amount financial distress should be referred came to the attention of the NCR, cred- sumer will need to pay for being un- debt – therefore, for as long as they agreed on before undergoing debt to the Debt Solutions Helpline on it providers and debt counsellors that der debt review. The NCR has guide- are under debt review, they cannot counselling. 0861 227 353, where they can be offered consumers held several misconcep- lines about the costs, which debt acquire any new debt. The consumer Kim Royds, Absa Managing Execu- various options to ease their debt be- tions about the process. counsellors can charge consumers. will only be removed from the credit tive: Retail Collections, added that fore applying for debt counselling. six reasons why we get into financial difficulty Reason #1: Reason #2: Reason #3: Reason #4: Reason #5: Reason #6: No financial education Leaving your options and Relying on lousy advisers emotional baggage greed No clear or specific The more you educate yourself, choices to others (and can be expensive Most of us carry a lot of emotional Like any other drug, greed empties financial goals the better your finances will be. often, the wrong people!) Be careful of people who keep baggage when it comes to money. our minds of logic and this is the Wise man once said that if you You will quickly realise that mas- Strangely enough, not many peo- saying ‘just my two cents worth’, Some people see money as a mark main reason some people learn are not planning to go anywhere, tering your finances means mas- ple are too concerned about their because in many cases, their ad- of success. Some of us use spend- hard lessons when participating in you are guaranteed to get there. tering a bigger portion of the rest financial situation, and think that vice is more costly than that – and ing as a way of making ourselves “get-rich-quick” schemes. You need to have clear and spe- of your life, because whether you others will take care of it for them. you are probably going to pay. feel better. Whichever the case, cific financial goals – such as like it or not, almost everything you Personal finance management is these attitudes lead us to much of how much you want to save, how do today is related to your financial important – treat it as such! our financial and credit problems.. much you want to spend on each position in one way or another. aspect of your budget, etc. Sponsored by Absa in the interest of financial literacy Putting consumer issues on the agenda 7 FINaNCIaL LIteRaCY Back to basics: Cut through the jargon Financial jargon is often difficult to 1. Credit 2. Interest Rates 3. Return higher to make up for the associated understand and might create obstacles Credit is money borrowed from a Interest works in two ways: you either A return is income. Investors earn a re- risk. Investment with lower risks will in managing your personal finance. At bank or another financial institu- earn interest when you deposit money in turn on their invested capital or equity, yield lower rewards. Absa, we are constantly trying to make tion. Credit is convenient when your your bank account, or pay interest for an and banks work on the same principle. the world of finance and banking easi- cash flow is low, but should be used amount on credit. The interest percent- In order to continually attract inves- 5. Inflation er and more convenient. responsibly in order to avoid the age you pay or earn is called an interest tors, banks must ensure sufficient re- Inflation reflects the reduction in the We have compiled a list of widely dark spiral of uncontrollable debt. It rate. The interest rate on credit is either turns on their money. purchasing power of your money. This used financial terms and simplified is important to remember that when fixed or variable, and will be quoted on means that inflation is the percentage their meanings for ease of under- you buy on credit, you are using the an annual basis, while your account will 4. Risk and reward increase in overall prices over a one standing. To keep up with our ever product/ service before settling the be charged monthly. Interest can also be Reward is directly linked to return on year period. Inflation is not static and changing world, it is important to cost and that you will still have to calculated at the beginning of the loan capital. When there is a high risk of los- changes constantly with the overall broaden your financial knowledge on pay the full amount within a stipu- period, or at the end of each month once ing all or a big part of invested capital, increase and decrease in prices of con- an ongoing basis. lated period. the repayment is settled. the expected return on capital will be sumer goods and services. tips for being a wise consumer Among other qualities, a wise consumer is generally character- ■■ Enquire about all the details of what you are buying. Ensure that agreement in this regard, you are, in effect, promising a certain ised as being honest, sensible, enquiring and confident. you know the features of what you are buying and how much it kind of conduct. This means that you must always honour your fi- Here are some tips to help you sharpen your consumer will cost you or pay you out in the end. Ensure that you do not nancial commitments. You have both rights and responsibilities. skills. overlook any aspect of your agreement. Remember that if you are ■■ Find out how to fix a mistake and/or lodge a complaint. It takes ■■ When dealing with financial institutions, ensure that you are entering into a contract, you are always entitled to read through two parties to enter into a contract or agreement. Should you feel honest about your financial situation. Knowing the truth about the fine print – and take your time before you sign anything. that an error has been made or that you are receiving poor serv- your finances will set you free and help you escape the clutch- ■■ Know the promise you are buying and keep the promise you ice, you are entitled to have it corrected. Ensure that you have es of debt and poor financial planning. are making. When you buy a financial product and enter into an your Financial Adviser’s contact details at hand. Sponsored by Absa in the interest of financial literacy 8 Consumerfair Fifth Edition 2010 Published by the National Consumer Forum FINaNCIaL LIteRaCY absa backs the NCR Debt Management Media Campaign Absa is fully behind the debt man- agement media campaign which was launched by the National Credit Regu- lator (NCR), together with the Banking Association South Africa (BASA) and the Debt Counselling Association (DCASA). The objectives of the campaign in- clude consumer education on steps to take when in financial distress and to highlight the debt counselling process. The campaign is targeted at two key audiences: ■■ The first audience is consumers who are beginning to feel the pressure of debt. The message to these consum- ers is that they should not ignore the signs but quickly act by first contact- ing their bank. ■■ The second audience is paying and non-paying consumers who are al- ready under debt counselling. The main focus is to educate consumers about the terms and conditions of debt counselling and to remind cus- tomers that debt counselling does not imply that they will be able to escape their financial obligations. Advertisements pertaining to the campaign were flighted from Septem- ber 2010 on the country’s major media channels (television, radio, print and online) and they will run until Decem- ber 19. In essence, debt-stressed consum- ers are encouraged to call 086 111 6362 or SMS 32422. Both lines will be manned by the National Debt Mediation Asso- ciation (NDMA) staff, who will filter the consumer calls and reroute them to the respective banks. Absa customers in financial dis- tress could also contact the Absa Debt Solutions Helpline. The Helpline was created to assist customers in financial distress. Depending on a customer’s fi- nancial situation, the solutions offered via the Helpline may involve the re- structuring of a payment and extension of repayment terms. The Debt Solution Helpline can be reached on 0861 227 353. The operating hours are from 8am to 4.30pm, Monday to Friday. In response to the growing custom- er interest in debt counselling, Absa has also created the Absa Debt Counselling Call Centre, which seeks to assist cus- tomers receiving debt counselling, Debt Counsellors and Payment Distribution Agencies regarding all debt counsel- ling matters. Absa customers who are receiving debt counselling should be referred to this helpline. The Helpline can be reached on 0861 005 901. The op- erating hours are from 8am to 4.30pm, Monday to Friday. Sponsored by Absa in the interest of financial literacy 7128 EH 0810 copy.pdf 1 10/21/2010 10:55:37 AM Putting consumer issues on the agenda 9 C M Y CM MY CY CMY K Tip: Take charge of your financial destiny How many South Africans really take the time to understand and manage their financial affairs? Many people fall into the trap of, for example, not taking the necessary precautions to ensure that they manage their debt responsibly thus avoiding financial distress month after month. We all need to learn how to take better charge of our financial destiny. People tend to over spend too much of their hard-earned cash and maximize their credit limits in order to satisfy their immediate needs. By not being prudent when it comes to managing your finances you will never be able to build a healthy financial position today, in order to secure a better future for you and your family tomorrow. It’s time to take charge of your destiny educate yourself about saving and savings tools, e.g. types of savings and investments. Develop a habit of saving. You can start saving today, even if it is only a small amount. For sound financial advice, consult your nearest Absa branch. Sponsored by Absa in the interest of financial literacy HoW Does oNe BeCoMe aN estate ageNt? The qualification is also intended to build on the skills that have been gained in the Level 4 qualification and will, essentially, consolidate the broad knowl- edge, skills and values required in the property and real estate profession. The new entrant may, similarly, be certificated against the qualification after undergoing training through an accredited education provider or by way of the Recognition of Prior Learning route.The completion of the Further Education and Training Certificate: Real Estate or the National Certificate: Real Estate, as So as to assist our current estate agents and to outline requirements the case may be, constitutes a precondition for admission by the professional es- for newcomers to the residential real estate profession, we have tate agent to the Professional Designation Examination (“PDE”) which is a practi- compiled an informative overview on both the education and legisla- cal and integrated test of knowledge for estate agents that will be conducted by tive requirements. the Estate Agency Affairs Board. The PDE is the final test of the estate agent’s Although the legislative requirements have not changed, with the im- ability practically to implement and apply the learning that has been achieved and plementation of the new educational dispensation for estate agents successful candidates will be awarded a certificate of professional recognition by which came into effect on 15 July 2008, there are further require- the Board. ments that need to be incorporated in professionalising the industry. NEW ENTRANTS TO THE PROFESSION THAT REQUIRE PRINCIPAL STATUS NEW INTERN ESTATE AGENTS It should, again, be emphasised that once the principal’s course has been suc- All new estate agents entering the estate agency profession for the cessfully rolled out by the EAAB it will be required of all newcomers to the estate first time as from 15 July 2008 must serve a compulsory one-year in- agency profession who wish to act as principal estate agents to complete the ternship period working under the active supervision and control of a following: principal estate agent, or of a full status estate agent, who must have at least three years practical experience. A mentor-protégé relation- • Complete the compulsory one year internship period as an intern estate ship will, thus, be created. The intern estate agent must also keep a agent; logbook (also referred to as a ‘Portfolio of Evidence’) reflecting the • Acquire the Level 4 qualification, or an acceptable alternative; and various estate agency functions and activities that have been under- • Complete the Professional designation Examination (PDE) taken and performed during the course of the internship period. • Attain the Level 5 qualification, or an acceptable alternative, before they may be registered as principal estate agents. The intern estate agent is required to complete the Further Education and Training Certificate: Real Estate, a qualification that is intended EXISTING PRINCIPAL ESTATE AGENTS to enhance the provision of entry-level service within the property and real estate professions and to provide the broad knowledge, The EAAB is presently being rather flexible, however, where principal estate skills and values needed in the property and real estate environment. agents are concerned until such time as the NQF Level 5 qualification is fully up The intern estate agent may be certificated against the Qualification and running, if a person, at the moment, qualifies for registration as a principal after undergoing training through an accredited education provider or estate agent, whether through having passed the previous Board examination or by way of the Recognition of Prior Learning route. by reason of holding a qualification that is deemed to be equivalent to the NQF Level 5 qualification for this purpose, such person will be permitted to register as It is expected that, after having served as an intern estate agent for a principal estate agent. a continuous period of 12 months, the newcomer will attain the same degree of knowledge, skills and practical ability as estate agents who In the former case the principal will, of course, be required to complete the NQF have already been active in the profession for quite some time. The Level 5 qualification or an acceptable equivalent, whether through training or by new educational dispensation is carefully designed to ensure that the undergoing the RPL route, by no later than the end of 2011. Having achieved full theoretical knowledge acquired in the classroom and the practical status as a principal estate agent the persons concerned may then proceed to experience gained in the workplace compliment one another to pro- undertake the Professional Designation Examination so as to obtain professional vide a head start to success by introducing newcomers as painlessly recognition as a principal estate agent. as possible to the exciting new career that awaits them. CONTINUOUS PROFESSIONAL DEVELOPMENT (CPD) NEW ENTRANTS AS A PRINCIPAL ESTATE AGENT A continuing professional development programme will also be implemented New entrants wishing to act as principal estate agents must be cer- in accordance with current best practice requirements in most world-wide real tificated against the National Certificate: Real Estate. This qualifica- estate regulatory jurisdictions. One of the major intentions of the Board in tion not only adds value to the understanding of the property and introducing outcomes based education for estate agents was to raise societal real estate sector by principal estate agency practitioners but also perceptions of estate agents to professional status. It is increasingly accept- enhances their appreciation of the practical functionalities occurring ed that members of a profession should maintain their professional standing within the workplace. through continuing professional education and development.
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