Law Society of South Africa
4 March 1998

We refer to the above-mentioned Bill and would like to comment as follows on the Bill.

The Association of Law Societies agrees that debt collectors should be regulated and we therefore approve of the introduction and acceptance of the Bill in principle.

In respect of the detail, we have the following comments:

1. Section 3
The ALS agrees that there should be at least two attorneys on the council for debt collectors to be appointed by the Minister, because attorneys have wide ranging experience of debt collection procedures; and further that the magistrate to be appointed should have at least ten years experience in civil courts. Ideally this could be a retired magistrate.

The ALS further suggests that the words "without the option of a fine" in section 3(5)(c) be removed.

2. Section 8(1)
This section should also provide for attorneys who practise in incorporated practices.

3. Section 10
The words "and has been sentenced in respect of that offence for a period of imprisonment without the option of a fine" in section 10(a)(1) should be removed.

4. Section 13
We feel that the word "material" in section 13(1)(a) could lead to difficulties. Perhaps a distinction should be made between false and mistake.

5. Section 13(1)(b)(i)
We suggest that the words "and is sentenced in respect of such offence to a period of imprisonment without the option of a fine" in section 13(1)(b)(i) should be removed.

6. Section 15(2)
It is suggested that the period of one year in section 15(2) should read three years to bring it in line with the Attorneys Act and similarly the Act should make provision for fines up to R10 000,00 to bring it in line to fines applicable to attorneys.

7. Section 19.1
We object to the provision of section 19(1)(b) referring to "necessary expenses and costs". Debt collectors found favour with creditors because they recovered their remuneration from their clients and not from the public. They further advertise that they work on the basis of no collection no fee.

They now wish to recover fees and expenses from members of the public. Attorneys also recover fees and costs from the public but the fees and costs that they recover are fees and costs owed to the attorneys clients. Debt collectors do not discern between costs (which is a fee remunerating one for one's work) and expenses (which are payments made by the debt collector in respect of stamps, sheriff fees. etc). Debt collectors take their overheads and put that out as an expense which they would like to recover and which they are in fact doing.

This matter was fully discussed in a matter where debt collectors were charged with certain contraventions. We attach a copy of that judgment.

The attorneys' profession can not agree to this provision unless debt collectors clearly indicate what they would like to recover.

Furthermore the attorneys' profession will not assess the fees of debt collectors as provided for in this section.

Up until now section 60 of the Magistrate's Court Act prohibited debt collectors to recover fees from members of the public. They would now like to be put on an equal footing with attorneys and want to recover fees and expenses from members of the public. Attorneys are obliged by law to have a fidelity fund which protects members of the public from theft of those moneys paid by them. It is suggested that no exception should be made for debt collectors. Similarly debt collectors should submit annual audit certificates of their trust accounts without which they should not be allowed to continue practising as in the case of attorneys.

I have just had a discussion with Mr Eugene Joubert of the Organised Debt Collectors on this section and he agrees with our statement that the words necessary expenses and costs' are wide. We have agreed that we will further discuss a suggested amendment to this section.

Should you wish to have any further information on this, I will gladly furnish it