Standing up for our employees

Earlier this month, Anglo American’s Platinum business announced that it had brought legal proceedings against a major debt administrator, which the company believes has engaged in unlawful or unscrupulous practices and has, in the process, prejudiced the financial well-being of some of the company’s employees.

A debt administrator is often appointed by a court to help a person who is in debt to properly manage their affairs and repay their creditors. Applicable for an amount up to R50,000 (approx. £2,800), it is meant to assist heavily indebted people to find their way out of debt, by providing protection from creditors for the debtor, while managing a repayment process that is affordable to the debtor and equitably distributes repayments to creditors. Administrators are meant to charge up to 12.5% of the amount being repaid by the debtor, as their fee for providing their services. Administrators are also meant to ensure that proper records are kept and provided to the court and to the debtor to show how the debtor’s affairs are being managed.

However, some administrators are not only failing to provide proper records, but are also charging excessive fees – in excess of the amounts allowed by law. In some cases, 100% of a debtor’s monthly repayment is retained by the administrator. This prejudices both the debtor and creditors.

Excessive individual indebtedness

Anglo American is concerned about the negative effects of excessive individual indebtedness. Employee indebtedness has a significant impact on employee well-being and morale, and can influence unrealistic wage demands. It can damage society and stands in the way of true economic transformation. We have a responsibility to help our people disentangle themselves from debt or, better, to avoid the consequences of excessive borrowing or irresponsible lending in the first place.

While the law is intended to provide protection to consumers and heavily indebted people, legislation regulating micro-credit, debt collection and debt administrators can be ambiguous or difficult to understand, and is sometimes poorly enforced. This opens the way for some, including credit providers, administrators and others to exploit the unsuspecting and uninformed. One aspect that is particularly troubling, and which affects thousands of Anglo American employees, is the position relating to administrators. 

While the proceedings have been brought by our Platinum business and several employees who are clients of this particular administrator, we believe that these efforts will ultimately serve a broader goal. Through this litigation we hope to clarify the law regulating administrators, and to hold accountable administrators that Anglo American considers to have overstepped the bounds of the law, or to be exploiting ambiguity in respect of their entitlements.

This most recent undertaking is a natural extension of our indebtedness programme, which includes the auditing of emolument attachment orders (EAOs) issued by the courts against employees’ pay, and financial wellbeing programmes across the Group. Anglo American’s Platinum business makes use of a third party service provider, Summit Financial Partners, to render a range of services in relation to EAOs, such as checking the validity of the EAO and the legitimacy of the underlying debt.

There are also other court cases, not involving Anglo American, which are being brought in courts across South Africa to examine the plight of heavily indebted people and the manner in which debts are created and collected. One such case is an application that has been launched out of the Western Cape High Court, in which the University of Stellenbosch Legal Aid Clinic, Webber Wentzel and Summit are assisting some people in challenging the lawfulness of EAOs. We’re not involved in that litigation but fully support its premise.