Pretoria - Did you know that if you have two or more accounts with the same bank, or one of its affiliates, and you fall behind with your payments on one of them, the bank can whip money out of another account in order to offset that debt?

It’s called set-off, and many people aren’t aware of the practice until it happens to them.

Often it happens when the person gets a windfall of sorts.

In two recent cases I took up, a woman paid her salary into her husband’s account, for some reason, and it got whipped out as set-off for his credit card debt.

In another, a woman was sent money as a gift by her brother in Australia, which was then transferred into another of her accounts as “set-off”.

Obviously, the banks rely on the element of surprise, because if the account holder had prior warning, there’s a good chance they’d make sure the money was no longer in the account for the bank’s taking.

So the Code of Banking Practice does not require banks to inform an account holder that they’re about to “rob Peter to pay Paul”.

But the code does compel the banks to “promptly” inform the account holder after set-off has been applied to one of their accounts.

Banking Services Ombudsman Clive Pillay says set-off is intended to be applied as a last resort and his recommendation to banks was that not more than 60 percent of funds in an account should be taken.

That’s not what happened in Lenny Moodley of Durban's case last month. Not by a long shot.

The first he knew of his current account having been raided was on February 26, the day after pay day, when he got a call from Standard Bank to say that his current account was not just depleted of funds, but minus R18 000.

Stunned, he thought there must be some kind of mistake.

But when he checked on his cheque account online, he discovered that two amounts totalling R40 000 had been withdrawn from his account.

After several phone conversations with his bank, he discovered that the money had gone into his credit card account.

Moodley had got into difficulty with his credit card repayments, and was handed over to Standard Bank’s attorneys.

Both parties agreed to an amount which he was obliged to pay monthly in settlement of that debt, and Moodley insists that he’s been paying it diligently.

When he queried why set-off had been applied, and in such a radical way, the bank’s credit simply told him that it was within the bank’s right to remove the money “if I have excess funds in my account”, Moodley says.

“I argued that I didn’t have excess funds in my account – in fact I’d been left with minus R18 000 in my account. They told me to speak to the attorneys that are handling my case.”

The attorneys confirmed to Moodley that he’d been repaying his debt according to the agreement, and said there was nothing they could do.

Meanwhile, Lenny’s bank account was minus R18 000 and all his debit orders were “bouncing”.

Plus, the bank was adding R115 for every unpaid debit order, pushing him further into the red.

That’s when Moodley turned to Consumer Watch for help.

Hours after I took up the case with Standard Bank, Moodley received an SMS from Standard Bank confirming that the money –- the full R40 000 – had been deposited into his account, plus all the unmet debit order fees he’d been charged by Standard Bank – R115 each.

Naturally, I asked the bank why it happened in the first place.

Sihle Bolani, of media relations, said: “Standard Bank wishes to apologise to Mr Moodley for the set-off error.

The deducted amounts, as well as related fees from unpaid debit orders, have been refunded to Mr Moodley..

“We recognise that the actions of the agent involved bypassed our strict standard operating procedure and we have already undertaken an urgent investigation into the current controls surrounding this and will close any potential gaps in the process.”

There were two issues in Moodley’s case: that it happened in the first place, and such an extreme amount; and that he couldn’t sort out the problem himself or get any answers from the bank’s call centre staff.


One way to avoid set-off completely, of course, is not to have more than one account with the same bank.

That’s not to say that set-off isn’t justified and applied correctly in many cases.

If set-off has been applied, and you don’t get contacted by the bank about the withdrawal soon after it happens, and if you aren’t getting any statements relating to the set-off, and where the money went, complain to your bank.

And if you are not left with enough money to meet your essential monthly expenses, dispute the amount and ask for some of it to be refunded to the account.

If the bank won’t entertain your concerns, lodge a complaint with the Ombudsman for Banking Services. - Wendy Knowler for the Pretoria News