The National Credit Regulator is throwing a lifeline to debtors after a flood of complaints highlight the exorbitant fees debt counsellors are charging over-indebted consumers to help them to climb out of the debt trap.

Mpho Thekiso, the project manager of debt counselling at the credit regulator, which was established under the National Credit Act to regulate the credit industry, said her office received about 40 complaints a month about opportunistic debt counsellors.

Effective since June 1, the Act makes provision for debt counsellors to assist debt-strapped consumers who cannot meet their monthly account repayments and who want to be declared over-indebted and restructure their debt.

"When the debt counsellors are in the process of assisting them (the client), only then do they disclose their fees. Consumers are now wanting to discontinue the service of one debt counsellor and move to another debt counsellor and that's becoming a trend."

Marius Jonker, a legal officer for the Association of Debt Collectors, said some debt counsellors were charging fees comparable to attorney's fees.

"They just say I can charge what I want and they charge as much as attorneys do, plus a 12,5 percent collection commission," said Jonker.

"Advice to consumers is to speak to your debt collector before going in for counselling because you are likely to get a better deal there.

"The National Credit Regulator is aware of this and the Act will have to be amended," he said.

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