Conduct Matters: Tribunal Guidance on Diligence, Process and Accountability in Debt Review

TRIBUNAL GUIDANCE ON DEBT COUNSELLOR CONDUCT

Three recent Tribunal matters draw a clear distinction between compliant conduct and professional failure.

• Matters were dismissed where debt counsellors acted diligently, followed process, and maintained engagement
• Liability arose where conduct reflected withdrawal without strategy, poor follow-up, and effective abandonment

Tribunal message:
Debt counsellors are not judged on outcomes alone
They are judged on conduct, effort, and accountability

DCASA has unpacked these cases to extract practical conduct standards, risk indicators, and jurisprudential “do’s and don’ts” for practitioners.

Legal Summary: Nicolas David v Adri de Bruyn & NCR (NCT/396952/2025/141(1)(b))

The National Consumer Tribunal dismissed an unopposed application by a consumer seeking a full refund of all monies paid under debt review, allegedly due to misconduct by his former debt counsellor.

The Tribunal found that the debt counsellor fully complied with the National Credit Act (NCA), the Regulations, and her conditions of registration. Evidence showed that the consumer was properly placed under debt review in terms of section 86(1), all prescribed forms (Forms 16, 17.1 and 17.2) were submitted, and payments were lawfully distributed by a registered PDA, not the debt counsellor.

Importantly, the Tribunal confirmed that:

• Debt counsellors may not collect or distribute consumer funds (Regulation 11), and there was no evidence of such conduct.
• Debt counselling fees were lawfully charged and recovered in line with Circular 01 of 2018, within the first two months of the process.
• A Form 17W may validly be issued where a consumer is non-cooperative, and in this case the issuance was not successfully challenged.
• High or slowly reducing balances during debt review do not, on their own, indicate misconduct, as interest continues to accrue in accordance with the approved repayment plan.

The Tribunal further reinforced that debt review does not guarantee a reduction in outstanding balances and that dissatisfaction with progress does not entitle a consumer to a refund absent proof of prohibited conduct.

Key NCA Debt Review Principles Reinforced

• Compliance with process and documentation is central to lawful debt review.
• PDA distribution protects debt counsellors from allegations of fund mismanagement.
• Fees charged in line with NCR guidelines are not refundable merely because the consumer is unhappy with outcomes.
• Form 17W is a legitimate regulatory tool, not evidence of wrongdoing.
• The onus of proof rests on the consumer to show prohibited conduct.

Legal Summary: Modisha Mahlodi Isaac v Christiaan Frans Craven & NCR

(NCT/380830/2024/141(1)(b))

The National Consumer Tribunal dismissed an application by a consumer seeking a refund of monies paid under debt review, removal from debt review, and an accounting relating to a single credit provider (Capitec).

The Tribunal found that the debt counsellor complied with the National Credit Act and the Regulations and that the consumer failed to establish, on a balance of probabilities, that the debt counsellor caused the breakdown of the debt restructuring process.

Crucially, the Tribunal accepted that:

• The consumer was properly assessed as over-indebted and a Form 17.2 was validly issued.
• All credit providers initially accepted the restructuring proposal, after which the debt counsellor took reasonable steps to obtain a magistrates’ court consent order.
• The failure to obtain a court order was directly attributable to the consumer’s non-cooperation, particularly his failure to provide documents required by the attorneys.
• Payments were not made by the debt counsellor, but by an appointed Payment Distribution Agent (PDA). Returned payments by Capitec and subsequent reallocation by the PDA did not amount to misconduct by the debt counsellor.
• The Tribunal cannot remove a debt review flag, compel the issuing of a clearance certificate, or adjudicate legal fee disputes, as these fall outside its statutory jurisdiction.

The Tribunal found no causal link between the debt counsellor’s conduct and Capitec’s withdrawal from the restructuring proposal and confirmed that dissatisfaction with a single creditor outcome does not justify refunds or findings of prohibited conduct.

Key NCA Debt Review Principles Reinforced

• Debt counsellors are facilitators, not paymasters: PDAs are responsible for distributions.
• Consumer cooperation is essential to finalising a court order; failure to cooperate breaks the process.
• A restructuring proposal without a court order remains vulnerable, particularly where consumer non-compliance delays finalisation.
• Returned or reallocated PDA payments do not imply misconduct by a debt counsellor.
• The Tribunal’s remedial powers are limited by statute and do not extend to administrative debt review outcomes.

Legal Summary: Helen Margaret Shaw v Kamani Joseph & NCR

(NCT/394950/2025/141(1)(b))

The National Consumer Tribunal found that the debt counsellor materially failed to comply with her statutory duties and conditions of registration, resulting in serious prejudice to the consumer. The Tribunal declared the conduct prohibited, imposed an administrative fine of R25 000, and ordered the transfer of the consumer to a new debt counsellor.

While the Tribunal confirmed that it lacks jurisdiction to remove a consumer from debt review or order a clearance certificate where statutory requirements are not met, it was unequivocal that the debt counsellor’s conduct undermined the core protective purpose of debt review.

The Tribunal found that:

• Although the consumer was correctly assessed as over-indebted and initially placed under debt review, the debt counsellor failed to finalise the process after withdrawing the magistrates’ court application.
• The debt counsellor did not timeously put a revised restructuring proposal in place, leaving the consumer under debt review for more than five years without a court or consent order.
• This failure deprived the consumer of the legal protection afforded by sections 86(10)(b) and 88(3), exposing her to continued creditor enforcement despite ongoing payments.
• The debt counsellor conceded that she did not do enough to re-engage creditors or secure a new confirmatory affidavit to relaunch the court application.
• Errors in affidavits, communication failures, and poor client engagement demonstrated a lack of professionalism and reasonable care.

The Tribunal held that the debt counsellor’s conduct contravened section 52(5)(c) of the NCA, read with General Condition A2, which requires debt counsellors to act professionally, reasonably, timeously and fairly, and not bring the profession into disrepute.

Key NCA Debt Review Principles Reinforced

• Debt review is a protective legal process, not an indefinite administrative status — failure to secure a court or consent order defeats its purpose.
• Withdrawing a court application triggers a duty to promptly put an alternative restructuring solution in place.
• Consumers must not be left “in limbo” under debt review without statutory protection.
• Tribunal jurisdiction is limited: it cannot remove debt review flags or grant clearance certificates unless section 71 requirements are met (Van Vuuren v Roets confirmed).
• Where a consumer remains over-indebted but loses confidence in a debt counsellor, transfer to a new debt counsellor is the correct remedy, not termination of debt review.
• Professional conduct and active case management are enforceable obligations, breach of which may justify administrative fines.

Why this case matters

This decision is a clear warning that prolonged inaction, poor communication, and failure to complete the debt review process will attract regulatory sanction, even where the consumer also bears some responsibility. It strongly reinforces that debt counsellors are custodians of consumer protection, not mere administrators.

Full case law here:

40. JUDGMENT-N David v A de Bruyn & NCR_396952.141.1b

41. MM Mahlodi v CF Craven and Ano 380830.25

39. Joseph – Judgment 394950

Tribunal-Derived “Do’s and Don’ts” for Debt Counsellors

DO’s

• Do finalise the process: Court order, consent order, or lawful transfer

• Do act after rejection: Revise proposals promptly if creditors oppose

• Do document everything: Proof of service, correspondence, payment trails

• Do escalate early when court applications stall

• Do transfer consumers if the relationship breaks down

• Do remember: your obligation continues until the process lawfully ends

DON’Ts

• Don’t leave consumers under debt review without protection

• Don’t withdraw a court application and “park” the file

• Don’t rely on PDAs or creditors to fix a stalled matter

• Don’t ignore communication failures or incorrect filings

• Don’t assume consumer frustration = consumer fault

• Don’t treat debt review as open-ended

Tribunal’s clear position

Inaction is not neutral — it is misconduct.