This could end up affecting up to 1.8 million consumers, NCR CEO Gabriel Davel said in Johannesburg.
"We are well into the credit crisis - with an Act we have in place - but it is not being implemented because of obstruction."
He was speaking at the launch of the National Debt Mediation Association (NDMA), a new forum for credit providers and debt counsellors, who represent over-indebted consumers.
Davel said legislation was in place to regulate the process of debt counselling, which saw over-indebted consumers consolidate their debt and re-negotiate payment terms while their main assets remain protected.
But he said the banks were not sticking to their end of the deal.
"The four mainstream banks signed a code ... but the banks refuse to abide by the rules," said Davel. "The big four banks here are the primary culprits ... the biggest obstacle is the willingness of the credit providers."
Davel said although one could argue that while consumers had been reckless to end up in an over-indebted situation, one should also remember how reckless banks were in offering credit.
Also, consumers who had already been issued with default summons' did not qualify for debt counselling.
The debt review process was currently raking in R52 million per month in restructured payments, and that was increasing by about R10 million per month, said Davel.
"The system is working," he said. About 70,000 South African consumers were already registered for debt counselling but very few of these cases had been concluded, said NDMA CEO Tjaart van der Walt.
"Less than 3% of these cases have to date been brought to conclusion and sanctioned by a court order," said Van der Walt.
"The current over-indebtedness situation is of great concern to credit providers and as a result the credit industry agreed to collaborate to change and improve this situation on a voluntary basis."
The situation was not expected to improve soon, as South Africa was officially in a recession, and statistics showed that 41.6% of the 61 million credit accounts were deemed delinquent, said Van der Walt.
He estimated that up to 1.8 million consumers would have applied for debt review three years from now.
The NDMA would offer a platform for the roleplayers to discuss problems in the process, including the banks' decisions to oppose nearly all debt review applications on technicalities.
"It's going to be a process to sort this out and it will not happen tomorrow morning. But we are discussing with them [the major banks] already," said Van der Walt.
"The old South African way is to sit down and discuss matters. A whole lot of pulling still needs to be done," he added.
All the major banks and credit providers are members of the NDMA, which is funded by the banks following an order by the NCR. Consumers can get more information at www.ndma.org.za or dial 086-111-6362.
Source: Sapa
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