Alternative Dispute Resolution South African Perspective Cynthia Matshiakgotshi

Alternative Dispute Resolution South African Perspective Cynthia Matshiakgotshi Head Of Department – Credit Information

Contents o What is alternative dispute resolution o Difference between ADR and litigation o Advantages of ADR o Challenges of ADR o Regulator o National Credit Act

Contents Continued o Challenges within the credit industry o Conclusion and recommendation

What is Alternative Dispute Resolution o Informal process o Common factors o Alternative to litigation o No regulating authority

Difference: ADR and Litigation o Litigation - Public process - Formal and technical - External rules - Execution of judgment - Command process (court orders) o Alternative dispute resolution - Private process - Informal process - Internal rules - Consensual process

Advantages of ADR o Advantages of ADR - Cost saving - Speed - Efficiency - flexibility - Informal

Challenges of ADR High number of consumer disputes High number of removal of information based on unresolved disputes Escalation of disputes to regulating authorities (credit bureaux) No regulating authority (ADR)

Regulator National Credit Regulator Regulation of credit bureaux 13 registered credit bureaux 4 main credit bureaux

National Credit Act o National Credit Act 34 of 2005 - Applicable provisions to ADR - Section 134 - Section 129 o Proposed amendments - NCA amendment bill – 29 Mei 2013 - Regulation of ADR

National Credit Act o o All credit transactions which are undertaken in South Africa are bound by the National Credit Act 34 of 2005 (NCA) The NCA was designed to: - Protect the consumer - Promote a fair, transparent and accessible credit market and industry - Promote and advance the social and economic welfare of South Africans

Role of Credit Bureaux o Custodian of data - o ID numbers, names and surnames, contact details, court orders, payment profile, trace alert, enquiries, employment details etc. Provider of data ⁻ Negative and positive credit information o Obligation of the credit bureaux ⁻ Verification of data ⁻ Protection of data

World Bank’s 2012 Rating of South Africa o South Africa has a sophisticated credit bureaux system o We were nominated as of the best in the world by World Bank in terms of ease of getting access to credit based on the strength of legal rights and the depth of credit information

Consumer Rights o Receive credit report - Free of charge - Minimum fee of R 20. 00 o To challenge the accuracy of the information - Credible evidence or - Removal of the listing o To redress o To reason why credit application is declined

Consumer Perception of credit bureaux - pre 2004 o ‘Black listing’ of consumers o Lack of confidence in the dispute process o Threat to close the credit bureaux o Violation of consumer rights - Privacy - Credit bureaux are biased o Credit bureaux are responsible for declining credit applications (misconception)

Current Public Perception o Although credit information rating by the World bank was good, there is still a negative perception about credit bureaux o Negative credit information is still being viewed as hampering the growth of our economy o The above may be due to insufficient consumer awareness and education about the credit bureaux

Challenges o Credit industry - Identity theft - Credit bureaux - Unauthorised access to consumers credit information o Credit or service providers - Bad debts - Possible remedy

Conclusion and Recommendations o Apart from the challenges and Co experience ADR is effective in resolving credit bureau and credit related disputes o What is required for effective ADR process: - Communication

Conclusion and Recommendations o Consultation with the relevant stakeholders - Get buy in o Clear dispute process o Effective case management procedures and timelines o Clear policies o Staff (legal and credit background, analytical skills) o Ongoing consumer awareness and education!

Thank you!