Credit Ombud Enters New Field Of Play

Adv. Randolph Samuel @ Lucid Living™

The Credit Ombud recently announced that it has expanded its jurisdiction to include complaints related to credit transactions.

I concur with the Credit Ombud that there is a need for an alternative dispute resolution agency (ADRA), to mediate disputes between consumers and credit providers. In fact, section 134 of the National Credit Act 34 of 2005 (NCA) expressly recognizes ADRAs. The motivation for including ADRAs into the game was to ensure that disputes were directed away from courts and resolved in an efficient and cost-effective manner.

I however disagree with the view that, consumers had no alternatives. Since the enactment of the NCA complaints by consumers, related to credit transactions, were filed with the National Credit Regulator (NCR). Under section 15 of the NCA, the NCR is responsible for, amongst other matters –

  • receiving complaints concerning alleged contraventions of this Act;
  • investigating and evaluating alleged contraventions of this Act; and
  • referring matters to the National Consumer Tribunal (the Tribunal).

Consumers are permitted (under section 136 of the NCA) to lodged disputes directly with the NCR, who refers such disputes to the Tribunal for adjudication.

The NCA facilitated the establishment of the Tribunal. Section 27 of the NCA sets out the functions of the Tribunal which includes, amongst other matters –

To adjudicate in relation to any –

  • application that may be made to it in terms of this Act, and make any order provided for in this Act in respect of such an application; or
  • allegations of prohibited conduct by determining whether prohibited conduct has occurred and, if so, by imposing a remedy provided for in this Act.

In addition to adjudicating consumer disputes referred by the NCR, consumers could file disputes directly with the Tribunal (in terms of section 137(3) of the NCA).

The move by the Credit Ombud, to now consider disputes relating to credit transactions, does not enhance the consumer’s right to recourse – this right existed since the inception of the NCA and was heavily utilized. The Credit Ombud’s wider jurisdiction, will however decrease the burden on the NCR and thereby promote greater efficiency – that is the real benefit to the consumer.

Consumers will continue to retain the right to lodge complaints directly with the NCR. Unlike section 134(4) of the NCA, the consumer is not procedurally required the first attempt to have the dispute resolved directly with the credit provider, before referring the matter to either –

  • an Ombud with jurisdiction – in the case where the credit provider is a financial institution; or
  • a consumer court or an ADRA.

The Credit Ombud will therefore have to ensure that it acts with the utmost objectivity and integrity, when adjudicating disputes related to credit transactions. Unless it establishes a credible record of impartiality, it will not win the support of consumers, who have relied on the NCR over the past 4 years, to protect their rights and bring offending credit providers to book.