Debt Collectors Act

27 November 1998 No. 1546.

27 November 1998 It is hereby notified following Act which information:- that the President has assented is hereby published to the for general Hierby word bekend gemaak dat die President sy goed- keuring geheg het aan die onderstaande Wet wat hierby algemene inligting gepubliseer word:- ter- No. 114 of 1998: Debt Collectors Act, 1998. No. 114 van 1998: Wet op Skuldinvorderaars, 1998. 2 No. 19525 GOVERNMENT GAZETTE. 27 NOVEMBER 1998 ACI No. 114, 1998 DEBT COL.I.ECTOKS ACT. 1998 GENERAL EXPLANATORY NOTE: Words underlined with a solid existing enactments. line indicate insertions in (English text signed by the President.) (Assented to 19 November 1998.) ACT To provide Collectors; collector; of fees or remuneration connected therewith. for the establishment to provide of a council, known as the Council for the exercise of control over the occupation for Debt of debt to amend the Magistrates’ Courts Act, 1944, so as to legalise the recovery for matters by registered debt collectors; and to provide B E IT ENACTED follows:- Definitions by the Parliament of the Republic of South Africa as

1. In this Act, unless “Council” means “debt collector” means- the context otherwise the Council indicates- for Debt Collectors established by section 2; fb) Ic) a person, other than an attorney or his or her employee or a party to a factoring arrangement, who for reward collects debts owed to another on the latter’s behalf; a person who, other than a party to a factoring arrangement, his or her regular business, paragraph a person who, as an agent or employee of a person referred to in paragraph (a) an employee the debts on behalf of such person, excluding or (b) collects whose duties are purely administrative, clerical or otherwise the actual occupation of debt collector; in the course of to in them for his or her own benefit; (a) in order to collect takes over debts for reward subservient referred to in exchange means the Director-General of the Department of Justice; “Director-General” “factoring arrangement” means an arrangement between a creditor and a financier for funding, either sells or offers as in terms of which the creditor, that such claims are not bad or security, claims against his or her debtors: Provided further that no doubtful at the time they are so sold or offered as security: Provided overdue debt or a claim is part of such a factorig arrangement; “Minister” means the Minister “person” includes a juristic person; “prescribe” means to prescribe by regulation; “this Act” includes any regulation or norice made or issued under this Act. for which a demand has been made, ‘of Justice; 5 10 15 20 2s (0) (b) as chairperson, experience as members- (9 (ii) (iii) 4 No. 19525 GOVERNMENT GAZETIE, 27 NOVEMBER 1998 Act No. 114, 1998 DEBT COLLECTORS ACT, 1998 Establishment and objects of Council for Debt Collectors 2. (1) There is hereby established a juristic person to be known as the Council for Debt Collectors. (2) The objects of the Council are to exercise control over the occupation of debt collector. Composition of Council 5 3. ( 1) The Council shall consist of not more than 10 members appointed by the Minister. (2) The Minister shall appoint as members of the Council- any fit and proper person with a suitable degree of skill and 10 in the administration of civil law matters; body or bodies; a magistrate; an attorney nominated by a representative at least two but not more than four debt collectors, appointed after consultation with organisations tors, who are natural persons and who have exercised debt collector for at least three years; two persons who, in the Minister’s opinion, are fit and proper persons to serve on the Council; and one person consumer proper person two of whom shall be representing debt collec- the occupation of interests and who, in the opinion of the Minister, from nominations by institutions representing is a fit and submitted to serve on the Council. to time (iv) (v) shall from (3) The Council a vice-chairperson, who shall in the absence of the chairperson have all the powers and duties of the chairperson, is present at a meeting of the Council, the members present shall elect a person from their own ranks to preside at that meeting. nor the vice-chairperson the chairperson and if neither from among its members time elect (4) A member of the Council shall hold office for a term, not exceeding three years, that the determined by the Minister at the time of the member’s appointment: Provided Minister may withdraw an appointment of a member at any time and, provided further, that a member may be reappointed at the expiration of his or her term of office. (5) No person shall be appointed as a member of the Council if he or she- insolvent; . . IS an unrehabilitated fails to comply or is not capable of fully complying with a judgment or order, including an order for costs, given against him or her by a court of law in a civil case; in the preceeding 10 years has been convicted of an offence of which violence, dishonesty, extortion or intimidation does not permanently reside in the Republic. is an element; or (6) A member of the Council shall vacate his or her office if he or she- in subsection to a disqualification contemplated (5); (a) becomes subject (bl (c) becomes of unsound mind; in the case of a member appointed be a debt collector; is absent without meetings of the Council; or in the case of a member who is a debt collector, has been found guilty in terms of section 15 of improper conduct. for more than two consecutive the leave of the chairperson in terms of subsection (2)(b)(iii), ceases to (d) (e) Meetings of Council 4. (1) The Council shall meet for the first time at the time and place determined by the in every financial year at the times and and thereafter at least three times chairperson places determined by the chairperson or, in his or her absence, (2) The quorum (3) The decision of a majority of the members of the Council present at a meeting of (2) and section 16(3), be a decision of the for a meeting of the Council shall, subject to subsection the Council the vice-chairperson. shall be a majority of its members. 15 20 25 30 35 40 45 50 55 6 No. 19525 GOVERNMENT GAZETIE,

27 NOVEMBER 1998 Act No. 114, 1998 DEBT COLLECTORS ACT. 1998 Council and, in the event of an equality of votes on any matter, the person presiding at the meeting concerned vote. shall have a casting vote in addition to his or her deliberative Executive committee 5. (1) The Council may appoint Council which shall, subject Council, be competent during or exercise all the powers and functions of the Council: Provided members of the executive committee appointed three of its members as an executive committee of the (2) and the directions of the to perform that the majority of the shall be members of the Council other than those the periods between meetings of the Council in terms of section 3(2)(b)(iii). to the provisions of subsection 5 10 (2) The executive committee shall not be competent- in so far as the Council may otherwise direct, to set aside or vary a (a) (6) except decision of the Council; or to exercise the power referred to in section 15(3)(a). (3) Any act performed or decision taken by the executive committee shall be valid in 15 so far as it is not varied or set aside by the Council. Remuneration and allowances of members of Council ’

6. Out of the funds of the Council- shall be paid to a member of the Council who is not in the (u) (b) such remuneration full-time employ of the State; and such allowances member of the Council, or her functions as such a member, travelling for by a shall be paid to him or her in the performance of his and subsistence expenses incurred as may be determined by the Minister case. Appointment of personnel from time to time generally or in any particular

7. The Council may appoint such personnel as it may deem necessary performance of its functions and management the remuneration and conditions of service of such personnel. of its administration for the efficient and may determine Persons prohibited from performance of certain acts 8. (1) As from a date fixed by the Minister in the Gazette, no person, excluding an attorney or an employee of an attorney, shall act as a debt collector unless he or she is in terms of this Act and, in the case of a company or close registered as a debt collector in addition corporation carrying on business as a debt collector, unless, to the company or close corporation and member of the close itself, every director of the company corporation and every officer of such company or close corporation, not being himself or herself a director or member but who is concerned with debt collecting, as the case may be, is registered as a debt collector. (2) A notice under subsection at least 180 days before the date (1) shall be published referred to therein. concluded (3) Any agreement and his or her client or between a debt collector and his or her employee either before or after the date referred to in subsection in that subsection shall be invalid to the extent of such incompatibility. is incompatible with a debt collector the prohibition (1) which contained between Application for registration as debt collector 9. (1) An application Council on the prescribed fee. for registration form and shall be accompanied as a debt collector shall he lodged with the by the prescribed application (2) A person who applies for registration as a debt collector in terms of subsection shall furnish such additional particulars determined by the Council. in respect of his or her application (3) If the Council is of the opinion with in respect of an application of section 10, grant provisions collector. that the provisions of this Act have been complied to the as a debt (1). it shall, subject the applicant to in subsection and register the application referred (1). as may be 20 25 30 35 40 45 50 55 8 No. 19525 GOVERNMENT GAZETTE, 27 NOVEMBER 1998 Act No. 114, 1998 DEBT COLLECTORS ACT, 1998 Disqualifications 10. (1) No person shall be competent (a) (6) to be registered as a debt collector- if- in the case of a natural person, (i) to subsection (2), in the preceding subject convicted intimidation of an offence of which violence, is an element; 10 years he or she has been extortion or dishonesty, (ii) he or she has been found guilty in terms of section 18 of improper conduct; (iii) he or she is of unsound mind and has been so declared or certified by a competent authority; (iv) he or she is under the age of 18 years; or (v) he or she is an unrehabilitated in the case of a company or close corporation, a member of the close corporation to be registered as a debt collector. insolvent; or if a director of the company or is in terms of paragraph (a) not competent 5 10 15 (2) (a) Any person who is not competent of having been convicted of an offence referred prescribed manner contemplated commission of that offence were of such a nature that the relevant conviction disqualify in that subsection on the grounds the occupation of debt collector. to be registered as a debt collector on account (I)(a)(i), may in the the disqualification relating that the circumstances to be exempted to the Minister to in subsection from exercising the applicant apply from to the should not 20 (b) Upon receipt of an application referred to in paragraph (a), the Minister shall cause- (i) (ii) such application such appropriate. investigation to be published in the Gazette; and to be conducted into the matter as he or she deems 25 (c) If the Minister is satisfied that the circumstances of such a nature that it is not likely to affect the suitability of the applicant occupation of debt collector, direct that the applicant from registering as a debt collector. to the relevant offence is to exercise the the Minister may, after consultation with the Council, shall not on account of the relevant conviction be disqualified relating Certificate of registration

11. The Council shall issue to every person registered as a debt collector, a certificate of registration on the prescribed form. Register 12. (1) The Council every debt collector whose application approved, or whose registration has been withdrawn or disapproved. shall keep a register of the names and prescribed particulars of under section 9(3) has been for registration (1) shall- in subsection in the Gazette annually; (2) The register contemplated be published be updated every second month by the Council; be available and be submitted Gazette. for inspection by the public at the prescribed places and times; to Parliament within 14 days after the publication thereof in the 30 35 40 45 Payment of subscription fees prescribed 13. (1) Every person fees. (2) If a debt collector registered as a debt collector shall pay to the Council the fails to comply with the provisions of subsection (l), the Council may suspend his or her registration him or her is received by the Council: Provided within concerned, three months of the date of suspension the Council may withdraw the registration. as a debt collector until the amount owed by 50 that if the relevant amount is not paid of the registration of the debt collector (3) Section 16(2) and (3) shall, with the necessary changes, apply to the withdrawal of the registration of a debt collector under subsection (2). 55 IO No. 19525 GOVERNMENT GAZETTE, 27 NOVEMBER I998 Act No. 114,1998 DEBT COLLECTORS ACT, 1998 Code of conduct 14. (1) la) The Council shall, subject to the approval of the Minister, adopt a code of conduct for debt collectors and shall publish such code in the Gazette. (bl The code of conduct, and any amendment thereof, shall be submitted to Parliament within 14 days after publication thereof in the Gazefre. it is simultaneously (2) The Council may, subject to the approval of the Minister, amend or repeal the code that such code shall not be wholly repealed by it, so shall of conduct adopted by it: Provided unless adopted and approved by the Minister publish any such amendment, replaced by a new code of conduct further, in the Gazette. repeal or replacement (3) The code of conduct drawn up or adopted by the Council and published for debt collectors that the Council and, provided in the Gazerre shall be binding on all debt collectors. Improper conduct by debt collectors 15. ( 1) A debt collector may be found guilty by the Council of improper conduct if he or she, or a mrson for whom he or she is vicariouslv liable- (4 fb) (c) (dl (e) f.0 (g) fh) ties or a familial or personal to use force agains; a debtor or any other person with us& force or threatens whom the debtor has family acts towards a debtor or any other person with whom the debtor has family ties in an excessive or intimidating manner; or a familial or personal makes use of fraudulent or misleading (i) (ii) (iii) the simulation of legal procedures; the use of simulated official or legal documents; representation person; or the making of unjustified as a police officer, sheriff, officer of court or any similar threats to enforce rights; representations, relationship; relationship, including- dishonesty, is an element; to spread false information of an offence of which violence, (iv) is convicted intimidation spreads or threatens ness of a debtor; contravenes contemplated contravenes or fails to comply with any provision of this Act; or other behaves or acts mentioned terms of a regulation. or fails in section 14; to comply with a provision in any manner in paragraphs to conduct, concerning amounting (a), (b), (c), (d), (e), cfl or (gl. which is improper than that in the creditworthi- of the code of conduct extortion 25 or (2) The Council may in the prescribed manner an allegation of improper it in the prescribed manner by a committee of members of the Council or by is to it in the prescribed manner or have that a debt collector whose conduct investigate submitted conduct by a debt collector investigated a person or persons nominated by it: Provided being investigated remesentative, shall be afforded the opportunity, of refuting anv allegations made against him or her. either in person or through a legal 40 ‘(3) If the Council fin& aSdebt<ollector guilt; of improper conduct, the Council may- ta) fb) fc) (d) (e) UI the fulfilment 45 the prescribed amount, which fine as a debt collector; for a specified period or pending withdraw his or her registration suspend his or her registration of a condition or conditions; impose on him or her a fine not exceeding shall be payable reprimand him or her; recover from him or her the costs incurred by the Council the investigation; order him or her to reimburse any person who the Council prejudiced by the conduct of such debt collector and to furnish or within a specified period with proof of such reimbursement; to the Council; in connection with 50 is satisfied has been the Council 5 10 1.5 20 30 35 12 No. 1952.5 GOVERNMENT GAZETTE, 27 NOVEMBER 1998 Act No. 114, 1998 DEBT COLLECTORS ACT, 1998 (g) combine any of the penalties under imposed on a debt collector this subsection. in terms of subsection (4) Any penalty (3)(a), (b), (c) or as fg) may be suspended, either wholly or partially, by the Council on such conditions the Council deems appropriate. (5) The Council may in its discretion assign any of the powers conferred on it under (3)(a), to a committee nominated to in subsection (2), and may rescind or vary a decision of such a committee. this section, except a power referred by it in terms of subsection 5 Withdrawal of registration by Council 16. (I) The Council may withdraw the registration of a debt collector- (a) (6) (c) that is false in a material that in his or her application if it appears given information if at any time after his or her registration- (i) he or she is convicted extortion or intimidation (ii) he or she is found guilty (iii) he or she becomes of unsound mind and is so declared or certified by a of an offence of which violence, dishonesty, is an element; in terms of section 15 of improper conduct; for registration respect; the applicant has competent authority; or or insolvent; (iv) he or she becomes in the case of a debt collector who is a company or close corporation, registration of a director of the company or a member of the close corporation or an officer of the company or close corporation, not being himself or herself a director or member, as the case may be, is withdrawn in terms of paragraph fb). if the (2) The Council shall not withdraw either in person or through a legal representative, heard. the registration of a debt collector unless he or she, to be has been given the opportunity (3) The Council shall give written notice to a debt collector of the withdrawal of his or her registration. Withdrawal of registration by court 17. (1) If there are grounds other in section 13(2) or 16 those mentioned the Council or any person with concerned, the withdrawal of the registration interest in the matter may by way of application on notice of motion apply to than justifying a material a court for an order withdrawing the registration of a debt collector. (2) Any High Court within whose area of jurisdiction the debt collector concerned is in respect of an resident, employed or carrying on business, in terms of subsection application (1). shall have jurisdiction Return of certificates of registration on withdrawal of registration

18. Whenever the registration of a debt collector or 17, the debt collector registration return issued to him or her under section 11. forthwith shall is withdrawn under section 13(2), 16 of to the Council the certificate 10 15 20 25 30 35 40 Recovery of money 19. (1) A debt collector shall not recover from a debtor any amount other than- (a) the capital amount of a debt due and interest for the period during which the capital amount legally due and payable remains unpaid; and thereon (b) necessary expenses and fees prescribed by the Minister in the Gazette after 45 consultation with the Council. (2) Upon request by a debtor and against payment of any prescribed a magistrate’s court or a costs committee of a provincial any account or statement of costs, interest and payments claimed to a debt collector or his or her client. (3) The provisions of subsection (2) shall not be construed as preventing fee, the clerk of law society may tax or assess to be owed by a debtor 50 the taxation 14 No. 19525 GOVERNMENT GAZETTE, 27 NOVEMBER I998 Act No. 114,1998 DEBT COLLECTORS ACT, 1998 or assessment of any further account or statement of costs reflecting further amounts which become payable by the debtor to the debt collector or his or her client and which arise from the same cause of debt as that from which amounts in an already taxed or assessed account or statement of costs arose. reflected (4) A debt collector shall deliver fee, a settlement prescribed credits in connection with a specific collection: Provided to request a settlement account account containing to a debtor, upon request and against payment of a a complete exposition of all debits and that a debtor shall be entitled free of charge once in every six months. Trust accounts 20. ( 1) Every debt collector who practises for his or her or its own account, shall open in the Banks Act, 1990 (Act and maintain a separate No. 94 of 1990), and shall deposit therein as soon as is possible after receipt thereof the money received or held by him or her on behalf of any person. trust account at a bank as defined 5 10 (2) The money deposited in terms of subsection (3), be paid within a reasonable (1) shall, together with the interest as or agreed time to the 15 under subsection determined person on whose behalf account, containing account shall be delivered the money that a settlement is received or held: Provided a complete exposition of all credits and debits reflected in the said to that person at least once a month. (3) All interest, if any, on money deposited in terms of subsection (1) shall be paid, as prescribed, to the person on whose behalf the money was deposited. 20 (4) A debt collector shall keep proper accounting records in respect of all money received, held or paid by him or her on behalf of or to any other person. (5) The Council may itself or through its nominee at its own cost examine records of a debt collector accounting (3) and (4) are complied with and, if during such an examination collector has not complied with those provisions, records of such debt collector and may recover applicable, from that debt collector. such updating it is found that the debt 25 the Council may update the accounting and, where the costs of the examination in order to satisfy itself that subsections the (l), (2), Auditing 21. (I) The accounting records and annual financial statements of the Council shall be 30 audited annually by a person appointed by the Council (2) No person shall be appointed under subsection for such purpose. an accountant and auditor (Act No. 51 of 1951), and is engaged in terms of the Public Accountants’ in public practice. (1) unless he or she is registered as and Auditors’ Act, 195 1 Financial year 35

22. The financial year of the Council shall be a year terminating on the last day of February. Regulations 23. (1) The Minister may, after consultation with the Council, make regulations- (a) (6) regarding any matter required or permitted Act; regarding generally, all matters which are reasonably necessary or expedient to be prescribed (2) Without prejudice in order to achieve to the generality Minister may, after consultation with the Council, make regulations- the objects of this Act. of the provisions to be prescribed of subsection (l), the in terms of this 40 (a) prescribing the fees payable by a debt collector to the Council in terms of section 13(l), and the periods within which such fees are payable; prescribing to pay an amount regarding the training of debt collectors. to in section 13( 1); and the circumstances referred under which a debt collector shall not be bound (b) (c) (3) Any regulation made under subsection (1) may provide that any person who 35 50 16 No. 19525 GOVERNMENT GAZETTE. 27 NOVEMBER 1998 Act No. 114,1998 DEBT COLLECTORS ACT. 1998 contravenes a provision and on conviction be liable to a fine, or to imprisonment months. thereof or fails to comply therewith shall be guilty of an offence three for a period not exceeding Delegation of Minister’s powers 24. (1) The Minister may on the conditions all of the powers conferred regulations, by the Director-General. to the Director-General upon him or her by this Act, save a power that he or she deems fit, delegate any or to make or an officer of the Department of Justice designated (2) No delegation of any power shall prevent the exercise of such power by the Minister. Offences and penalties

25. Any person who- 5 10 (a) (b) contravenes fails to return a certificate of registration a provision of section 8( 1); or shall be guilty of an offence and liable on conviction period not exceeding three years. Exemption from provisions of Act in terms of section 18, to a fine or to imprisonment for a 15

26. The Minister may, on the conditions that he or she deems fit, after consultation with the Minister of Trade and Industry and the Council, exempt any person or category of persons from the provisions of this Act. 20 Amendment of section 60 of Act 32 of 1944, as substituted by section 1 of Act 63 of 1976 and amended by section 2 of Act 4 of 1991

27. Section 60 of the Magistrates’ Courts Act, 1944 (Act No. 32 of 1944) is hereby amended by the substitution for subsection (1) of the following subsection: “( 1) Unless expressly otherwise provided in this Act or the rules and subject to 25 the provisions of section 19 of the Debt Collectors Act, 1998, no person other than an attorney or an agent referred to in section 22 shall be entitled to recover from the debtor any fees or remuneration in connection with the collection of any debt.“. Short title and commencement

28. This Act shall be called the Debt Collectors Act, 1998, and shall come into 30 operation on a date fixed by the President by proclamation in the Gazet~.