The law forbidding creditors from collecting on prescribed debts which falls under the National Credit Act 34 of 2005 (NCA) is well-known, established and adhered to – or so everyone would think.
The aim of this law is to safeguard consumers against unfair and exploitative practices by creditors and has been in effect for a number of years.
Despite the legal requirements and the guaranteed protection they offer consumers, Reana Steyn, the Ombudsman for Banking Services (OBS) warned that the OBS is still receiving, investigating and resolving complaints from bank customer’s relating to prescribed debts. In some cases, banks have been found guilty of engaging in this illegal practice.
“Unfortunately, in many instances, the protection afforded by the law is beneficial only to consumers who know about the legal principle as well as the Ombuds office. The majority of the public is left paying for debts that have prescribed and are therefore legally no longer collectable by creditors,” says Steyn.
Guest: Kwanda Vabaza, Manager: Communications at The Ombudsman for Banking Services.