News / South Africa

Ilse de Lange
2 minute read
20 Jun 2017
12:02 pm

Social development may not appeal ruling on social grant deductions

Ilse de Lange

Judge rules there are no prospects that another court could come to a different conclusion relating to debit orders.

Minister of Social Development Bathabile Dlamini. (Photo: GCIS)

A bid by the social development minister, the Black Sash and other parties to appeal against a court ruling allowing banks to make deductions from social grants through debit orders has failed.

Acting Judge Corrie van der Westhuizen dismissed applications for leave to appeal against his earlier ruling in favour of Net1 Technologies, Grindrod Bank and other institutions that amendments to social assistance regulations did not mean that no debit orders could be deducted from social grants.

Social Development Minister Bathabile Dlamini and the SA Social Security Agency (Sassa), Black Sash and other parties sought leave to appeal against the ruling, arguing that it affected the constitutional rights of over 16 million social grant beneficiaries, whose rights should be protected.

Judge Van der Westhuizen earlier ruled that the minister and Sassa’s interpretation of the amended regulations was “contrived, forced and untenable”.

He ruled that the amended regulations did not restrict social grant beneficiaries in the operation of their bank accounts with Grindrod Bank or any other commercial bank.

He found that the debit order against a recipient’s bank account was nothing other than payment of legitimate debt and that neither Sassa nor the minister had regulatory powers allowing them to regulate and impose rules and restrictions relating to electronic payments.

Sassa and the department interpreted the new regulations as prohibiting all electronic debits, stop orders and electronic fund transactions from beneficiary accounts held at Grinrod and instructed Cash Paymaster Services (CPS) to stop all debit orders from being processed.

Net1, CPS and Grindrod were criminally charged when they contested Sassa and the department’s interpretation and resisted implementation of the instruction.

The practical implications of Sassa’s interpretation affect the operation of over 10 million beneficiary bank accounts and social grants totalling about R550 million per month.

The SA Reserve Bank has cautioned that the effect of Sassa’s instruction would disrupt the system of collection and payment by creditors and debtors that would result in a broader economic impact due to the unsuccessful collection of debts.

Judge van der Westhuizen ruled that there were no prospects that another court would come to a different conclusion in respect of the nature of the Grindrod bank accounts into which social grants were paid, which he found operated within the normal banking environment under control of the SA Reserve Bank.

Counsel for Net1, Grindrod and the other banks argued that the minister would have to change the act or again amend the regulations if she wanted to achieve the laudable goal of protecting unsophisticated grant recipients against unscrupulous operators.

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