Civil servant salaries set for debt relief
September 4, 2015 | Hanna Ziady

Civil servant salaries set for debt relief - Moneyweb

‘20% of EAOs will be stopped.’ – Summit

JOHANNESBURG – Q LINK Holdings – which has been awarded a tender to investigate all emoluments attachment orders (EAO) on the salaries of civil servants – believes that at least 20% of these orders will be stopped in the next few months as a result of irregularities.

Q LINK Holdings, which was formed when Summit Garnishee Solutions acquired Q LINK from Business Connexion in 2013, has been attacking irregular EAOs for some time and pushing for change to what it describes as a “structurally unfair collection mechanism”.

Summit is a financial wellness firm that was heavily involved in the recent ‘Stellenbosch matter’ regarding EAOs, heard in the High Court earlier this year.

“Q LINK is incredibly excited at the opportunity to protect public servants from irregularities and to ensure all past transgressions are reversed and accounted for accordingly,” said executive chairman, Clark Gardner. Q LINK will also implement a solution that can interface into government’s payroll system for the future management of EAOs among public sector employees, who seemingly account for 40% or more of unsecured debt in South Africa, according to Summit.

Public servants will be able to voice their concerns regarding their EAOs. Where mistakes or irregularities are found, Q LINK will request that collectors “voluntarily correct their mistakes”, but will not hesitate to use the courts to “protect employees and ensure accountability,” Gardner said.

Gardner also said that where EAOs are found to be irregular and rescinded, Q LINK will challenge associated legal and collection fees, but will still find a means to recover the capital since “the debt still exists”.
“Irregularities and past over deductions will be challenged in the appropriate court to rescind on a case-by-case or class action basis and criminally prosecuted if appropriate,” said Gardner.

He told Moneyweb that Q LINK plans to “play very aggressive” where creditors and debt collectors are breaching the law, particularly where non-registered lenders are using the EAO system to collect on unpaid debt.
Gardner said the tender is worth “a few million a month”.

Impact of Stellenbosch judgement

Gardner said that Q LINK would definitely move to have EAOs rescinded that have been granted in the incorrect jurisdiction. When it comes to the actual judgement underlying the EAO, Q LINK will have to wait for the Constitutional Court to confirm the High Court ruling, Gardner said.

An EAO is simply a method of collecting on outstanding debt and follows a judgement made in respect of that debt. In July, Judge Siraj Desai ruled that seeking judgement on an EAO in a jurisdiction that is neither where the debtor lives or is employed is unconstitutional, even where the debtor has consented to that jurisdiction.
Speaking at the MicroFinance South Africa (MFSA) conference last month, CEO of the Association of Debt Recovery Agents (ADRA), Marius Jonker, complained that there is no uniform application of the law between magistrates’ courts that grant EAOs.

Sometimes even within the same court, there is a difference in procedure, he said. “Some magistrates’ courts require a national loan register [to issue an EAO], but that doesn’t exist,” Jonker noted.
“We cannot let the whole industry be judged by the circumstances of those 14 consumers who received loans and judgements that should never have been granted,” Jonker argued, referring to the individual cases that were placed before Desai by the University of Stellenbosch’s Legal Aid Clinic, which related mainly to low-income farmworkers in the Western Cape.

“A lot of credit providers will not survive this judgement if it stands,” he said.