Debit orders against social grant beneficiaries nothing more than payment of legitimate debt: court says

A debit order made against a social grant beneficiary’s account is nothing more than payment of a valid debt‚ the Pretoria High Court found on Tuesday.

“The debit order against a recipient’s bank account is nothing other than payment of a legitimate debt.

“In essence‚ it does not amount to a transfer‚ cession pledge‚ encumbrance or disposal of such grant‚” said Judge Corrie van der Westhuizen in his judgment relating to an application by Net1 and its subsidiaries to be allowed to make deductions from social grant beneficiaries’ accounts.

Van der Westhuizen ruled that regulations 21 and 26A Under the Social Assistance Act 13 of 2004‚ which was promulgated in May 2016‚ "do not operate to restrict beneficiaries in the operation of their bank accounts".

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Net1 and other companies had argued that the Sassa bank account should not be restricted‚ "that deductions and debit orders should continue to be facilitated from social grant beneficiaries’ bank accounts".

Net1 owns Cash Paymaster Services (CPS)‚ the private company that has controversially won the tender to distribute social grants.

The SA Social Security Agency (Sassa) and the department of social development had in the new regulations prohibited all electronic debits‚ stop orders and electronic fund transactions from beneficiary accounts held at Grindrod‚ a subsidiary of Net1.

The new regulations allowed only one deduction per month not exceeding 10 percent of the value of the beneficiary's social grant for a funeral policy issued by an insurer.

The Black Sash‚ as an intervening party‚ argued that if the High Court rules in Net1's favour‚ that the minister be given the opportunity to fix regulations to protect grant beneficiaries from exploitative practices.

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Van der Westhuizen held that the regulations do not and cannot apply where beneficiaries hold bank accounts with other commercial banks.

“The procedure of payment of the grant amount into the beneficiary’s account with Grindrod [one of the applicants]…is no different to that where the grant amount is paid into a recipient’s bank account with a commercial bank.

“Accordingly‚ the first‚ second and third respondents’ interpretation is contrived‚ forced and untenable‚” Van der Westhuizen found.

The department of social development had not responded to questions sent by TMG Digital by the time of print.

Black Sash had earlier described the judgment as “devastating”.

"I think it pretty much enabled companies to take deductions from social grants. It’s given them free rein to do so‚ and that is quite devastating‚ because of the impact that social grants have had on people’s livelihoods‚ but also because of the impact that deductions have had‚" the organisation’s attorney Nomonde Nyembe said.