Pretoria - The South African Social Security Agency (Sassa) has laid criminal charges against its service providers for allegedly failing to comply with an amended law that prohibits deductions from social grants.
Sassa executive manager Dianne Dunkerley said they were left with very little choice but to lay charges against Grindrod Bank and Net1 following their refusal to adhere to the amended law.
“A letter was sent to Net1 last month after the amended regulations were promulgated to make it very clear that deductions of any sort from the Sassa account were illegal,” Dunkerley told the Pretoria News outside the Sunnyside police station.
“We informed them we expected them to comply. We spelt out what we needed them to comply with; that no deduction of any sort, be it airtime, prepaid electricity or loans could come off a Sassa account.”
She said Sassa made it clear to the service providers that permission from the account holders was required.
Dunkerley said the beneficiary would then need to go to Sassa in person and request them in writing to provide details of the commercial account to allow them to have knowledge of those receiving the money.
“Therefore, any transfers that were happening that we were not aware of had to stop immediately. That was the correspondence we had with the service provider.
“We got a response from them saying they were not going to comply. They disputed the way we interpreted our own law and regulations,” Dunkerley said.
Net1 said they needed to deal directly with Grindrod Bank. “We then wrote to Grindrod, and their response was that it was impossible to stop deductions because the bank was operating within the National Payment System which was subject to different laws,” she said.
Police spokeswoman Captain Koba Brits said a charge of contravention of sections of the Social Assistance Act was being looked at.
In 2012, Sassa contracted Net1’s Cash Paymaster Services to pay the grants into bank accounts. Grindrod Bank provides accounts into which the grants are paid.
The government last month amended regulations to stop insurance companies from deducting funeral insurance premiums from grants. The government also wants to halt what it said were illegal deductions for services such as mobile phone airtime. Net1 has filed its own legal case, challenging the amendment.
Net1 said the regulations limited direct deductions from social grants paid to beneficiaries. The company said it interpreted the meaning of the word “deductions” to be specific to the practice of collecting life insurance premiums from grants, before they are paid into bank accounts. The company believed the legislation did not intend to curtail the right of beneficiaries to transact freely once the money was deposited into their bank accounts.
Grindrod Bank remained adamant that Sassa had misinterpreted the amended regulations. Managing director David Polkinghorne said that adhering to Sassa’s interpretation would put Grindrod Bank in conflict with the requirements of the National Payment Systems rules.
He said they were seeking clarity from the courts of the interpretation of the new regulations. “We are extremely sensitive to the plight of grant recipients, which includes their right of access to financial services as well as protection from unscrupulous industry participants.
“We have actively engaged regulatory stakeholders such as the South African Reserve Bank and Payments Association of South Africa to establish a practical solutions to give effect to the rights of grant beneficiaries,” said Polkinghorne.