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The role of debt counselling in the financial well-being of consumers in Gauteng

Gauteng, one of the nine provinces of South Africa, has a high number of households as compared to the other provinces. Geographically the province has the smallest land size, however it forms the central part of the South African economy. From the total value of credit granted in all provinces, Gauteng has the highest. The province has a high number of registered debt counsellors and an increasing number of consumers who apply for debt counselling because of over-indebtedness.
The high number of the registered debt counsellors and consumers seeking debt counselling service gave rise to the purpose of the study. The purpose of the study was to assess the role of debt counselling services provided by debt counsellors to consumers on the one hand, and to also assess whether debt counselling has had a positive effect on the personal financial well-being of consumers who participated in the debt counselling process on the other hand. Furthermore, the study aimed at developing a framework that will empower consumers to be self-sufficient with their finances. From the purpose of the study, two research questions were proposed: (1) How does the debt counselling service provided by debt counsellors assist consumers to manage their finances effectively? (2) Which role does the debt counselling service provided by debt counsellors play in terms of the personal financial well-being of consumers?
In an attempt to answer research questions, the theoretical framework of both personal finance and debt counselling were studied. The importance of personal finance, personal financial planning, the evolution of debt counselling, the effectiveness and the ineffectiveness of debt counselling services were identified.
A two-phased sequential design (qualitative and quantitative) was used. Fifteen debt counsellors were selected (for the first phase of the study) by making use of a purposeful sampling. These debt counsellors were interviewed and further requested to identify and send questionnaires to consumers whom they have rendered debt counselling service between the years 2007 and 2013. In the second phase of the study, 300 over-indebted consumers were surveyed through a snowball non-probability sampling technique and a response rate of 61% was realised.
Data was analysed using ATLAS.ti and the Statistical Package for Social Science (SPSS) for the first and the second data collected respectively. Furthermore, the exploratory factor analysis was used to analyse the data, and the factorability of the data was assessed by means of two statistical measures, namely Bartlett’s test of sphericity and Kaizer Meyer-Olkin.
It was observed that most debt counsellors lack financial management knowledge and do not have mechanisms to verify their clients’ financial well-being after debt counselling service had been completed. In addition, there was no evidence that consumers who received debt counselling improved in their financial well-being and that consumers also lacked personal financial management skills. The study concluded that, although debt counselling is essential, it does not necessarily assist consumers to effectively manage their finances.
The study purports to suggest the following: Debt counsellors should be subjected to formal financial management training prior to their registration, debt counsellors should provide personal financial management education to their clients, and assess the financial management conduct of their clients once debt counselling process is complete, and debt counsellors should establish debt counsellors’ forums. The South African government (in conjunction with the Department of Education and Training) should introduce and implement personal financial management education in both primary and high schools’ curricula. Personal financial management should continue to be offered at adult learning centres as well as other institutions of higher learning. Employers should appoint employee wellness officers who will provide personal finance training to employees. Credit providers should take the responsibility of educating their clients on how to manage their accounts and the importance of paying debts on time. The South African media should also be used by the government and the NCR to educate and inform consumers about finance-related matters. Finally consumers should seek guidance and advice before making financial commitments.
The study concluded by suggesting a framework that should help consumers to manage and sustain their financial well-being. / Business Management / DCOM (Business Management)

Identiferoai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:unisa/oai:uir.unisa.ac.za:10500/14666
Date06 1900
CreatorsMasilo, Kgomotso Hilda
ContributorsMarx, Johan
Source SetsSouth African National ETD Portal
LanguageEnglish
Detected LanguageEnglish
TypeThesis
Format1 online resource (xv, 200 leaves)

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