Net1 subsidiaries Money Line Financial Services and Manje Mobile Electronic Payment Services were granted their rights to enforce deductions on social grants paid to Grindrod bank accounts in the high court in Pretoria on Tuesday.
The subsidiaries and Grindrod Bank had previously been charged with criminal conduct for failing to implement he instructions of the South African Social Security Agency (Sassa) to desist from making deductions from the accounts of social grant beneficiaries.
For the majority of social grant recipients, grants are paid from Sassa via Net1’s Cash Paymaster Services into roughly 10m Grindrod bank accounts in the name of grant recipients, or guardians and parents of grant recipients (in the case of child grants).
The judgment handed down by AJ van der Westhuizen concerned the meaning and legality of amendments to regulations 21 and 26A of the Regulations under the Social Assistance Act 13 of 2004.
In May 2016, social development minister Bathabile Dlamini announced amendments to regulation 21 and 26A of the Social Assistance Act, which prohibits unauthorised deductions on the accounts of Sassa beneficiaries. This relates to all electronic debit orders, stop orders and electronic fund transfers from the accounts of Sassa beneficiaries that are held with Grindrod.
The judge found that the regulations clearly stipulate that a recipient is to receive the full grant amount before any third party (like a service provider for example) may exercise any rights or enforce any claim in respect of that amount.
He also found that the regulations do not apply in respect of debit orders lawfully deducted with the consent of the account holder. This is because a debit order does not, in the eyes of the law, amount to a cession, pledge or encumbrance of the grant.
In addition, the judge found that neither Sassa nor Dlamini has the powers to regulate bank accounts — those are exclusively the domain of the South African Reserve Bank. So in effect, recipients cannot be restricted in the manner in which they operate their bank accounts providing any deductions are agreed to lawfully.
The CEO of Sassa and the minister of social development were ordered to pay legal costs.
- This article was originally published on Moneyweb and is used here with permission
