Briefing to the Portfolio Committee on Trade and Industry on cases of the National Consumer Tribunal, with specific reference to
cases brought by the National Credit Regulator
Presented by: Ms D Terblanche, Executive Chairperson
Date: 20 May 2016
1
Overview - Acronyms
CMS Case Management System RDS: Remote Desktop Service NCT: National Consumer Tribunal / Tribunal NCR: National Credit Regulator NCC: National Consumer Commission NCA/NCAA: National Credit Act , Act 24 of 2005 and National Credit Amendment Act CPA: Consumer Protection Act ICT: Information Communication Technology DSS: Decision Support System PC: Prohibited Conduct
2
Overview - Glossary of Terminology
Allocation: To allocate a matter to a single member or three member Tribunal panel for hearing as required by the NCA. Close of pleadings: Pleadings is open for a set period of time after complete filing to allow the parties to file an answering and replying affidavit. After this period pleadings close and the matter is ready to be allocated for a hearing. Condonation application: If a party fails to follow the Tribunal rules (for example file an answering affidavit outside of the permitted time period), such a party must apply to the Tribunal to condone non-compliance with its Rules. If the non-compliance is not condoned, the step will be irregular and disregarded.
3
Overview - Glossary of Terminology cont.
Interlocutory proceedings / applications (includes condonation applications) These are proceedings that deal with the rights of the parties between the commencement of the action and its final determination for example - • Apply for an extension of time for submitting pleadings • Amendments to pleadings • Additional answering and replying affidavits • Seek directions regarding the conduct of the case • Compel the other party to comply with the rules or
directions or • Apply for interim relief or remedy etc.
4
Overview - Glossary of Terminology
Complete filing • A term which means that all the filing requirements for a specific
application, as set out in the Tribunal rules, have been met. This notice also signals that pleadings are open and that the Respondent may file an answering affidavit.
Consequent to the NCA Rule changes, assessments for complete / incomplete filings are no longer required – this reduces resource requirements and will require a change in the NCT‟s APP KPI index • NON DRA Assessments – We will continue with these, due to costs
and complexity if not done at outset. A guidance note will be prepared for unrepresented parties in relation to filing and hearings at the Tribunal.
• DRA Assessments - Done at motion court together with the adjudication process.
5
Glossary of Terminology
DRA • A Debt re-arrangement application is brought by a Debt Counselor on behalf of a
consumer to re-arrange the consumer‟s credit agreement obligations as agreed with the consumer‟s credit providers.
• Though these are agreements entered into between the DCs and credit providers on behalf of consumers the NCT interrogates these settlements carefully as they may contain –
– illegal interest rates – Instances where the consumer has in fact not consented to the DRA – Amounts to be repaid that are in excess of what the consumer can afford – Not all the consumers‟ creditors‟ consented to the DRA – Repayment terms that are longer than the reasonable work life of the consumer – Repayment agreements do not settle the debts – Insufficient provision for consumers‟ living expenses – Unaffordable repayments
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Glossary of Terminology
Non-DRA • Non-debt re-arrangement application. All other
applications which may be heard by the Tribunal, excluding DRA‟s. These applications in most instances require three member Tribunal members and a formal hearing.
• Approximately 53 Prohibited Conduct types and 34 applications in terms of NCA, for example referral of prohibited conduct by Regulator i.e reckless credit granting, failure to do affordability assessments, charging illegal interest rates, review of sale of goods, resolving disputed entries on statements or cases of prohibited conduct referred directly to the Tribunal by a consumer after receipt of a non-referral notice.
7
Glossary of Terminology
Non-DRA • Approximately 99 Prohibited Conduct applications in terms
of the CPA for example issues of quality of services and goods, warranties offered on repaired goods;
• These are often complex matters. Involving new legislation
without guiding precedents.
• All instances heard to date were brought to the Tribunal as a result of non-referral notices being issued to Consumers as opposed to matters referred by the Regulator.
8
Overview - Case management
CASE MANAGEMENT Main categories – majority case filings by other (unrepresented) parties and not by regulators
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Overview - Case management
CASE MANAGEMENT Delays in some of DRA / non DRAs cases (backlog brought forward from 2015/16 to 2016/17–
• Deluge of DRA case filings as from end Feb 2015 at +1600 cases per month (increased from +800 cases per month) - addressed through set downs driven forward aggressively; Motion courts set up; process changes
• CMS teething issues that led to the need for NCT to revise its case management processes and re-programme / institution of motion courts
10
Overview - Case management (cont.)
CASE MANAGEMENT • Delays in some of DRA / non DRA cases (backlog brought forward
from 2015/16 to 2016/17 cont. –
• Inaccurate (differences re interpretation of rule requirements with NCR) assessments i.r.o complete / incomplete filings
• Inaccurate reporting (wrong statistics fed through to executive management - dealt with by increased management interventions, increased executive oversight and disciplinary action against relevant official when picked up through internal processes and brought forward by the NCR. Level of interlocutory applications / matters held in abeyance due to High Court applications. 11
Overview - Case management (cont.)
CASE MANAGEMENT • Delays in some of DRA / non DRAs cases (backlog
brought forward from 2015/16 to 2016/17 cont. – • Management failure (cases not processed / set down
/ inaccurate management information fed through to executive management – review all filings with NCT, etc – COO will address)
• Result in increased strain on existing staff and resultant HR issues
12
International Benchmarks
• Benchmarking conducted during initial establishment of the NCT 2009, Australia
and New Zealand. Found that these regulatory bodies dealt with wide range of
matters for example competition and consumer issues.
• There are no entities that the NCT could identify within similar areas of
specialisation in order to determine a benchmark.
• Therefore the NCT has compiled its own KPI‟s around the turnaround of cases
and while these turnaround times have remained similar over the years these
timelines have take into account that the KPI‟s remained the same in light of the
significant increase in the cases.
• Going forward, further research would be done to establish whether there are
possible benchmarks or consider an OECD peer review 13
The Tribunal’s Caseload vis-à-vis other resources
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The Tribunal’s Caseload vis-à-vis other resources
• The Tribunal received 19,097 cases during 2015/16 • This is a 99,16% increase from the 9,589 cases received during
2014/15 • Over a 3 year period the Tribunal‟s caseload has almost quadrupled. • Our financial resources increased by 12,93% on average year-on-year
over the same period. • Our staff complement increased from 38 to 41 employees on the
structure. • Our Tribunal members increased from 11 to 13.
15
The Tribunal’s Caseload vis-à-vis other resources
CURRENT STAFFING:
FUTURE STAFFING REQUIRED: • Case load increase and permanent resources - not yet allocated
permanent resources to case increase as still establishing whether we require permanent resources / longer term contract resources
• Strain on staff and complaints • HR review and staff forum and engagements • Possibility mooted with the dti to get retired judges on board as
part-time Tribunal members.
69%African
3%Coloured
12,5%Indian
15,5%White62%
38%Female
Male
16
The Tribunal’s Caseload vis-à-vis other resources
FINANCIAL RESOURCES:
DRAs average costs: • 1 Tribunal member per case • R172 iro Tribunal member fees (1/32 Tribunal member day)
NON DRAs average costs: • More expensive and resource intensive • Over a longer period of time • Three Tribunal members ordinarily per case • R38,533 iro Tribunal member fees (7 Tribunal member days – 3 days
prep, 3 days hearing, 1 day judgment).
• Cost of 1 Non-DRA matter equates to cost of 224 DRA matters in relation to
Tribunal member fees. 17
Filing parties
• A
pplic
atio
ns c
an b
e br
ough
t by:
National Credit Regulator and National Consumer Commission
Consumers
Service providers
Registrants, including credit bureaus, credit providers, debt counsellors (DRAs), PDAs and
ADRs
18
Breakdown on cases filed with the NCT during 2015/16
• The 19,097 cases received during 2015/16 were as follows :
19
Non-Debt Re-arrangement matters per filing parties filed during 2015/16
20
Breakdown on cases filed during 2015/16 with the NCT per
NCA/CPA/Rules
21
Current Tribunal Cases
• The Tribunal has 11,091 current matters, not yet finalised.
• 10935 backlog– due to inaccurate information flows – addressed through increased executive oversight and disciplinary action
• 1187 cases filed prior to 2015/16 – status being verified with DCs
10 935 Current DRA Matters as at 31 March 2016
1187 DRA filedbefore 2015/16
9748 DRA filedwithin 2015/16
156 Current Non-DRA Matters as at 3 May
2016 31 Non- DRAfiled before2015/16115 filed during2015/16
10 filed after2015/16
22
Finalised Debt Re-arrangements applications within 2015/16
• The Tribunal issued 10,826 orders on debt re-arrangement applications during
2015/16.
• Majority through motion courts with resounding success.
Assessment of matters attended to at the motion courts as a service to the
parties, and no longer prior to the adjudication process.
Turnaround improved from in excess of 85 days to 56,45 days as at the
end of quarter 4.
Overall – our turnaround to finalise debt re-arrangement applications for
2015/16 from date of complete filing to date of issuing the order was on
average 73 days. As indicated previously, we will be requesting
amendments to this KPI in our APP to address change in process.
Very positive feedback from filing parties in relation to this specific
intervention 23
Finalised Non-DRA applications
• 132 Non-DRA cases finalised during 2015/16. • 76 filed during 2015/16 • 56 filed before 2015/16
• One further matter filed prior to 2015/16 finalised after 1 April 2016. 24
Current Status of NCR Cases
FILED PRE 2015/16 47
CURRENT MATTERS 26
FINALISED MATTERS 21
FILED DURING 2015/16 55
CURRENT MATTERS 51
FINALISED MATTERS 4
FILED POST 2015/16 2
CURRENT MATTERS 2
FINALISED MATTERS 0
Total 104 104
• 79 Current Matters • 24 Matters finalised during 2015/16 • 1 Matter finalised post 2015/16
25
NCR CURRENT MATTERS
FILED PRE 2015/16 26
CONDONATION IN PROCESS 1
AWAITING WITHDRAWAL FROM NCR* 9
SET DOWN/TO BE SET DOWN 3
POSTPONED 1 POSTPONED – HELD IN ABEYANCE DUE TO HIGH COURT APPLICATIONS AND LIQUIDATOR APPOINTMENT 7
JUDGMENT OUTSTANDING (INCL PRE-HEARING & POINT OF LAW) 5
26
NCR CURRENT MATTERS FILED BEFORE 2015/16
• 10 Matters filed during 2012/13 – 1 Matter held in abeyance due to a High Court Application; 9
Matters to be withdrawn by NCR
• 10 Matters filed during 2013/14 – 5 Matters held in abeyance due to a High Court Application;
2 Matters set down/to be set down (affected by intervention application, condonation, amendments and postponement); 1 Judgment, 1 pre-hearing ruling and 1 ruling on points of law outstanding.
• 6 Matters filed during 2014/15 – 1 Matter held in abeyance due to a High Court Application; 1
Condonation in process; 1 Matter set down for hearing; 1 Matter postponed at a hearing; 2 Judgments outstanding.
27
NCR CURRENT MATTERS
FILED DURING 2015/16 51
INCOMPLETE 2
PLEADINGS OPEN 6
CONDONATION IN PROCESS 6 CANNOT SET DOWN (PARTIES' REQUEST DUE TO HIGH COURT APPLICATIONS ON RELATED MATTERS) 2 PLEADINGS CLOSED: TO BE ALLOCATED FOR HEARING 19
SET DOWN/TO BE SET DOWN (INCL 1 PREHEARING) 13
POSTPONED - CANNOT SET DOWN 2
JUDGMENT OUTSTANDING 1 28
NCR CURRENT MATTERS
FILED POST 2015/16 2
INCOMPLETE 1
PLEADINGS OPEN 1
• 37 of 51 current matters filed during Quarter 4 of 2015/16 • Finalised 24 NCR cases during 2015/16
Turnaround – 186,48 days from close of pleadings and 232 days from date of filing.
All finalised NCR cases included, regardless of whether or not postponements, etc.
• After 1 April 2016, further 2 NCR matters finalised by issuing judgment and confirming a settlement agreement.
29
Turnaround on NCR pending / current Cases
• Average Turnaround as at 3 May 2016 from date of filing:
35 days for matters where there are no postponements, condonation applications, matters held over due to High Court Applications and awaiting withdrawals from the NCR) (12.25 days from close of pleadings) representing 29 matters;
Abovementioned 29 matters filed between Feb 2016 and April 2016.
30
Non-DRA Case process = 175 days
31
Non-DRA Case process with Interlocutory Applications = 240
days
32
Turnaround on NCR pending / current Cases
• Average Turnaround as at 3 May 2016 from date of filing: 358 days for matters where there are postponements,
condonation applications, matters held over due to High Court Applications, awaiting withdrawals from the NCR (289 days from close of pleadings) representing 50 matters;
33
Turnaround on NCR pending / current Cases
• Average Turnaround as at 3 May 2016 from date of filing (excluding cases where NCR withdrew applications) : 256 days for matters where there are postponements,
condonation applications, matters held over due to High Court Applications, (174 days from close of pleadings) representing 41 matters;
See following slides re turnaround period (causes and solutions):
34
Factors negatively impacting NCT service delivery
• 2015/16 was a very challenging year for the Tribunal. • We experienced 4 main challenges:
Our caseload all but exploded. We experienced serious management issues in dealing
with our matters. Procedural steps by the parties outside of Tribunal‟s
control increased turnaround times on our cases, for example Matters in High Court; Postponements; Condonation applications (with parties applying for
condonations when they receive notices of set down of cases) ;
Matters to be withdrawn- not withdrawn.
35
Factors negatively impacting NCT service delivery (continues…)
• Challenges continues… Case Management Issues, for example Set downs not done (evidence by underspent in
Tribunal member fees), judgment reviews and issuing delays, inaccurate assessments of non-DRA‟s (illegible pages), long delay in assessment of DRAs;
Teething problems with CMS implementation User adoption issues – implementation of our Case
Management System (“CMS”).
36
Factors negatively impacting NCT service delivery (continues…)
• All these factors combined resulted in the Tribunal struggling to attain and sustain the expected levels of service delivery.
• The continuous increase in our caseload may ultimately
compromise the Tribunal in achieving all of the targets set out in its 2016/17 – 2018/19 APP.
37
Steps taken to address negative impact on NCT service delivery
Challenge 1: Upsurge in Caseload – • Addressing impact on budget -
Increased number of DRA cases per day for Tribunal members; Distribution of case files via RDS; Continuous Motion Courts; ICT interventions to reduce cost of cases. Setting down more than 1 non DRA matter per day (up to 3
matters)
• Addressing impact on expeditious and accessible Adjudication – Continuous Motion Courts; Requests for additional Tribunal members; Reconsidering staffing structure to include additional
administrative personnel; ICT interventions 38
Steps taken to address negative impact on NCT service delivery
• To continuously address challenges due to our caseload additional human resources will be required In order for processes introduced to remain successful; Additional Tribunal members to adjudicate on increased
caseload; Additional administrative personnel – running additional motion
courts in more than one location at a time, in addition to dealing with Non-debt re-arrangement cases timeously and efficiently;
Reduce strain experienced by current staff and Tribunal members as a result of demand for services exceeding capacity.
39
Steps taken to address negative impact on NCT service delivery
Challenge 2: Management Issues –
Disciplinary actions were taken and relevant manager currently subjected to a disciplinary process which is still on-going;
Enhanced oversight over management of cases – to
continue, in conjunction with Acting Registrar, until finalisation of disciplinary process
40
Steps taken to address negative impact on NCT service delivery
Challenge 3: Procedural steps by parties outside control of Tribunal –
Tribunal must act in accordance to the principles of natural justice and as such this challenge is unavoidable;
The Tribunal however continues to consider interlocutory
applications to ensure that only those applications which must be granted in accordance with the relevant principles are taken forward and that applications without merit are dismissed so as not to cause unnecessary delays.
41
Steps taken to address negative impact on NCT service delivery
Challenge 4: Case Management Challenges–
Enhanced oversight over case management steps; Continuous training for employees in respect of our case
processes; Additional resources to reduce strain on employees
resulting in unnecessary errors; Regular interaction with stakeholders to resolve issues
on cases, for example having agreed with NCR re process in respect of illegible pages.
The user adoption issues around CMS are mostly resolved. However greater emphasis to be placed on change management going forward with the introduction to enhancements to CMS.
42
Highlights and Achievements
• Motion Court Process/Access
43
Highlights and Achievements
• Motion Court Process – resounding success with good feedback from filing parties. Innovative process; Hosted in all provinces; Managed to improve turnaround on debt re-
arrangements applications from above 85 days in Q3 2015/16FY to 56,45 days as at end of Quarter 4 2015/16FY ;
Overall – our average annual turnaround to finalise debt re-arrangement applications for 2015/16 from date of complete filing to date of issuing the order was on 73 days as a result of this process.
44
Highlights and Achievements
• Motion Court Process (continues…)
Issued 9667 orders through this process in a period of 7 months;
Not a sustainable long – term solution, as dependent on Tribunal member availability during office hours (and most of our Members are part-time)
Long term solution – enhancements to CMS (DSS and Purse Management);
CMS to be used in conjunction with motion courts – will also ensure greater accessibility to the Tribunal. 45
Highlights and Achievements
• Vigour and high quality of decisions retained, despite upsurge in caseload.
11 Appeals/Review to date, only 1 instance
overturned at the onset of adjudicative mandate. Tribunal decision in NCR v Capitec upheld by the
High Court on 23 March 2016.
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AFRICAN DIALOGUE FORUM
• The Tribunal participates in the African Dialogue forum • The African Dialogue is a forum hosted by the US Federal Trade Commission • Members are all consumer orientated regulatory entities throughout Africa • Meetings are held via teleconference call on a monthly basis, with one annual
conference • The Tribunal, together with the NCC and NCR will be hosting the 2016
international conference
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NCT Budget
• NCT „s financial resources in respect of 2016/17 and 2017/18 should be sufficient, despite current increased caseload, due to: Implementation of motion courts; Hearing more than one Non-DRA matter per day and
increasing in number of DRAs per day; Increase in filing fee (effective from 4 February 2016) Anticipated future ICT enhancements; Cost-saving on other line items, i.e. travelling,
digitization Additional grant of R3,000,000 received from dti during
2015/16. 48
NCT Budget (continues…)
• However, if caseload (being very unpredictable) increase again as experienced in the last three years, NCT may experience difficulty in achieving its mandate within its allocated budget.
49
NCT Caseload and financial implications - as per the APP 2016/17 -2018/19
Financial Year
Type of cases 2013/14 actual
2014/15 actual
2015/16 forecast
2016/17 forecast
2017/18 forecast
2018/19 forecast
Debt re-arrangement agreements
5 315 9 142
16 942 (80%)
27 107 (60%)
37 950 (40%)
49 335 (30%)
Non-debt re-arrangement matters
71 177
230 (30%)
300
(30%)
390
(30%)
508
(30%) Total number of filings 5 386 9 589 17 172 27 407 38 340 49 843
Note: The anticipated number of cases to be filed with the NCT in future are predicated by using trends of what was received in the past as well as other economic indicators such as debt levels, interest rates, etc. The caseload is the biggest driver of the NCT‟s costs pertaining to the variable expenses on the budget. 50
NCT Budget - as per the APP 2016/17-2018/19
Actual
2014/15 Forecast 2015/16
Budget 2016/17
Budget 2017/18
Budget 2018/19
Grant allocation 40 164 000 43 029 000 46 151 000 48 459 000 51 270 000
Additional Grant / Donor funding
- - 1 620 000 4 330 000 8 950 000
Other income 1 953 564 2 775 000 3 470 704 4 608 905 5 833 705
Surplus B/F 1 017 085 3 786 000 - - -
Total income 43 134 649 49 590 000 51 241 704 57 397 905 66 053 705
Expenditure 39 348 518 49 590 000 51 241 704 57 397 905 66 053 705
Compensation of employees
20 178 007 25 217 000 28 398 543 30 122 755 32 029 188
Goods and services 18 028 748 23 643 000 21 631 161 26 540 150 33 166 516
Capital expenses 1 141 763 730 000 1 212 000 735 000 858 000
Surplus / (Deficit) 3 786 131 - - - - 51
NCT Judgments
All judgments of the NCT are available on
www.thenct.org.za
www.saflii.org
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Our contact details
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Office Hours: Monday to Friday, excluding public holidays, from 09:00 to 16:00. Postal Address: Private Bag X 110 CENTURION 0046 Physical Address:
The National Consumer Tribunal Ground Floor, Building B, 272 West Avenue Lakefield Office Park
Centurion, Pretoria Telephone: (012) 683 8140.
Facsimile: (012) 663 5693. E-mail: [email protected]
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THANK YOU
Q&A
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