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six reasons why we get into financial difficulty by gyvwpsjkko

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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




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                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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