Picture: 123RF/STOCKSTUDIO44
Picture: 123RF/STOCKSTUDIO44

Debt collectors are subject to a strict code of conduct, prohibiting them from threatening or harassing debtors. Though attorneys who collect debt are not subject to the same code, it is nevertheless unethical for them to threaten debtors.

"We may be conducting a financial trace on your bank account shortly. If we find that you are in a position to pay more, we may forcefully instruct your bank to deduct funds from your account. Contact our office now to increase or effect payment if you would like to avoid this," reads an SMS sent out by Pretoria-based debt-collecting attorneys Groenewald Lubbe.

Advocate Andries Cornelius, the chief executive of the Council for Debt Collectors, says if this message had been sent by a debt collector, he or she would be prosecuted.

"It is a breach of our code of conduct to misrepresent the truth to a consumer. You are also not allowed to threaten a course of action that you will not or cannot follow. No bank can deduct payments on any account without either a court order or the consent of an account holder, and no bank can or will allow a trace on any account without a court order," Cornelius says.

Jaco Fourie, a senior legal official in the disciplinary department at the Law Society of the Northern Provinces (LSNP), agrees, saying no attorney may threaten or harass
a consumer, or deduct money from their account without consent or a court order.

Jacques Lubbe, an attorney and director of Groenewald Lubbe Incorporated, this week apologised for the SMS. "The SMS template is vague and may lead to some confusion. It has been deleted with immediate effect. The individual responsible for authorising the use has been reprimanded. We have also launched an investigation as to why the template was still in use," he says.

A drastic step

Some of the firm's clients are commercial banks that used to employ the common-law principle of set-off, Lubbe says. Set-off is when the bank takes money from one of your accounts that's in credit and uses it to offset or pay off what is owing on another of your accounts.

"This drastic step would usually only be employed due to repeated failure of the debtor to rectify the nonpayment. Our clients applied a formula as to what amount or percentage could be transferred from the one account to the other. In some instances, the debtor would maintain a massive credit balance on a cheque account but refused to make payment towards an amount overdue on a credit card account.

"Our clients have, however, ceased to implement this practice, and our SMS template relating to the set-offs should have been deleted," Lubbe says.

In the Council for Debt Collectors' latest annual report, Cornelius says "the issues surrounding the conduct of attorneys in the recovery of debts and the fact that their fees are uncapped have resulted in a public outcry and prompted the government to consider their inclusion under the Debt Collectors Act".

Attorney Anthony Millar, the former chairman of the LSNP, says that attorneys who recover debt fulfil two roles: that of a debt collector, which unqualified people can do, and that of a litigator, which only attorneys can do. "As a profession, we recognise there's a distinction in these services. The professional work of an attorney is different [to the work of a debt collector], though there are firms that do both.

Lodge your complaints

"We have rules dealing with these things, and such a message is threatening and unprofessional. I would urge the consumer to lodge a complaint with the law society. We know only what people report to us. If there are many [complaints of this kind], there's a basis for an inspection of the practice," he says.

According to the debt collectors' council's 2017 annual report, the council received 15,314 telephonic queries and complaints. Most of these related to prescription, emoluments attachment orders, credit amnesty, debt review, attorneys' conduct, and the buying of debt books.

Only 768 of complaints received were formal; 400 investigations were finalised with no disciplinary action taken, and in 88 matters disciplinary action was taken against the debt collector.

The report says the relatively high number of complaints received in which no disciplinary action was taken can be attributed to an acceptable explanation received from the debt collector - and to the fact that the council is compelled to investigate even when it is evident from the facts submitted that no transgression has been committed or when the complaint does not constitute a contravention of the Debt Collectors' Act, its regulations or code of conduct.