NCR research shows alternative dispute resolution is effective

National Debt Mediation Association (NDMA) welcomes this survey. "ADR, which includes mediation, offers consumers a way to resolve their disputes in a quicker, simpler and cheaper manner, instead of following a court process that is adversarial and expensive," says NDMA CEO, Magauta Mphahlele.

Within a short period, the NDMA has been able to establish its footprint across most provinces and has handled more than 6000 disputes and complaints with more than 70% success rate for cases with a resolved outcome.

Low usage rate of free services

The high success rate of ADR is confirmed by the research report, which reports that 85% of respondents were satisfied with ADR services provided by various entities and would recommend them.

However, the report indicates a low usage of free services offered by the NDMA, NCR, provincial offices and Ombud. It is important to note that the low usage might also be due to private companies having very big marketing budgets and therefore consumers being more aware of their existence. This is supported by the finding of the report that a majority of consumers heard about the services through newspapers, radio and television.

"Over the past few years, the NDMA has been advocating for mediation, as it is able to help consumers through the often legally complex and technical aspects of credit and payment disputes and offers benefits to consumers, especially low income consumers who most times cannot afford the services of a lawyer," says Mphahlele.

NDMA transition

The NDMA, which is currently in the process of transitioning into an independent consumer services NGO, is considering applying a mixed model, where those who can afford ADR services are charged a nominal fee, but those who cannot afford it are assisted free through donor funding or partnership referrals.

This is because the report indicates that consumers sometimes prefer to pay for these services, as this gives them the confidence that their ADR agent will be on their side and will be committed to ensuring the case is resolved in their favour. This should however not discount the important role played by the various Ombud schemes, as they service an underserved and often low income and vulnerable market. Consumers need to understand that ADR often happens through mediation, where the purpose is to find win/win solutions and therefore there is always a balance of rights and responsibilities.

ADR agencies need regulation

The report proposes that ADR agencies need to be regulated. While the NDMA agrees with this proposal to some extent, it is important to note that most service providers, including ADR service providers are regulated by the Consumer Protection Act, which covers advertising, service standards, contracting and fair pricing. It is therefore important to consider what is already covered in existing legislation before additional regulations are imposed. Concerns raised by the NDMA regarding some ADR agents are misleading advertising, overcharging and lack of transparency. The NDMA and the various Ombud report publicly on the cases received and resolved and this ensures accountability and transparency.

NDMA services

• A national helpline that provides information on any credit related matter, including the explanation of the options available to consumers to resolve their debt problems
  
• Budgeting and payment plan assistance where consumers are experiencing difficulties with repaying their debt
  
• Assistance with credit disputes, except debt counselling complaints, which are referred to the NCR
  
• Direct or employer hosted consumer education workshops
  
• Referral assistance where the NDMA does not have jurisdiction