Consumers who are struggling to repay their loans should take the first step and ask for help, aocate Piet Louw SC told the court on Monday.
“If you are a debtor and you are in trouble, like losing your job, then you should take the first step. We are dealing with one of the most regulated industries,” he said.
Louw represents Flemix amp Associates, a company that facilitates garnishee orders, which in the industry’s jargon are called emolument attachment orders (EAOs). He was arguing in the class action law suite brought to the Western Cape High Court by the University of Stellenbosch’s Legal Aid Centre (LAC) and 15 consumers. The LAC is first applicant in the case.
EAO are court orders that force your employer to deduct the money you owe to a creditor from your monthly salary. The case is dealing with the circumstances under which EOAs are applied. For example, the applicants a href=”http:groundup.org.zaarticlereport-flemix-legal-team-law-society-says-attorney-anton-katz_2684″have accused Flemix of obtaining ordersa to deduct amounts from clients’ salaries from courts in cities or towns far from where the clients live. The applicants are also concerned that clerks of the court, instead of magistrates, have been issuing EOAs.
The LAC is also challenging the constitutionality of certain sections of the Magistrates’ Court Act.
The list of respondents in the matter include the Minister of Justice and Correctional Services, the Minister of Trade and Industry and the National Credit Regulator as the action is intended to get the law on EAOs rewritten.
The matter has been in court since last week.
In court on Monday, Louw told the court that the credit industry was highly regulated and gave consumers several options to assist with unpaid debt.
The applicants oppose the practice of clerks of the court issung EOAs instead of magistrates.
“There are so many options available to debtors, but the law is clear. The debtor has to take the first step. They can apply for debt counselling for a cost of R50. The National Credit Act, which Flemix follows, allows for consumers to complain to the ombudsman or make a case in the consumer court at no cost. They can also go to an alternative resolution agent that will assist with mediation and arbitration where needed,” he said.
Louw said it was the responsibility of the LAC to inform their clients about the various options available to them.
“The Law Clinic has about 3,000 clients a year and their main focus is debt relief. Over the past four years they have had about 9,200 clients, but they only brought 15 for this matter. The applicants have reduced the industry to a joke which it isn’t. It is a highly complex system and that needs to be taken into consideration,” he said.
Louw said Flemix acknowledged that the current system was not perfect and that there would be a small percentage of errors and mistakes.
“This is less than one percent of their client base. Flemix knows that in every system there will be errors and mistakes and this is a reflection of what we have also acknowledged,” he said.
Louw said according to Flemix records more than 18% of the debtors approached by agents choose not to sign the consent documents.
The applicants oppose EOAs being granted in courts in cities and towns far from where the affected people live.
“The whole EAO system is based on the premise of consent. Before the amendment to the (Magistrates’ Court Act) in 2014, both the clerk of the court and the magistrate could issue EAOs, but this is no longer the case. Even now, once a judgement for an EAO is issued, the employer and the consumer have the right to oppose it before any deductions have been made,” he said.
Louw said the Department of Justice have submitted that they do not have the manpower to have every EAO case heard by a magistrate in court.
The hearing is expected to continue on Thursday.
Source : GroundUp