# Regulatory Compliance Category > National Credit Act Forum >  Functions of a debt counsellor

## Eugene

The Functions of a Debt Counsellor

The Debt Counsellor Function is a Limited Statutory Function - they should not give financial advice as dealt with in the Financial Advisory and Intermediary Services Act (Review of non-debt commitments).

The function of a debt counsellor is a limited statutory function. Whilst debt counsellors are expected to assist the public in their financial matters, they cannot act outside the parameters of their statutory function. A debt counsellor cannot provide financial advice unless registered with the Financial Services Board as a financial advisor in terms of the Financial Advisory and Intermediary Services Act, 2002 (FAIS). Financial advice in terms of FAIS is defined as "... any recommendation, guidance or proposal of a financial nature furnished, by any means or medium, to any client or group of clients" concerning:
Ã¢â¬Â¢	the purchase of financial products,
Ã¢â¬Â¢	investments of any kind,
Ã¢â¬Â¢	any loan linked to an investment or financial product,
Ã¢â¬Â¢	The termination, replacement, or variation of financial products.

The functions of a debt counsellor are detailed in terms of section 86. They are limited to dealing with over-ÃÂ¬indebtedness and restructuring. The manner of dealing with these two issues is also limited in the Act. This means that the duty of a debt counsellor is prescribed - interference in the affairs of a consumer is not allowed. The decision of over-indebtedness or restructuring must be based on application by the consumer. Although not stated, it is not unlawful to consult with a consumer without providing financial advice (unless registered to do so). The purpose of the consultation should be to obtain more information or clarification concerning the application of the consumer and to establish whether debt structuring can be considered. Section 86(5) expressly states that a consumer who has applied for a debt review must "... comply with any reasonable request by the debt counsellor to facilitate the evaluation of the consumer's state of indebtedness and , prospects for responsible debt rearrangement".

This does not preclude a debt counsellor from expressing views concerning a debtor's investments in the recommendation made to the Magistrate in terms of section sec 86(7). The debt counsellor must be aware of other possible legal processes to assist with over-indebtedness. Depending on the circumstances, the debt counsellor may recommend that a debtor applies for an administration order, if it is considered necessary for an administrator to manage the affairs of the debtor.

The administration or sequestration functions are entirely determined in terms of a court order and are carried out at the discretion of a court. They should only be used as a last resort.

The debt counsellor does not have the power to appoint him/herself to manage the affairs of a debtor unless the creditors and the debtor agree in the debt rearrangement agreement that the debt counsellor will have this function. The Magistrates' Court order may also stipulate that the debt counsellor will carry out this function.

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enyaw (11-Aug-08)

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