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Johannesburg - The National Credit Regulator and the Treasury must join forces to stop debit orders being deducted from child grant recipients, said Fred Steffers, managing director of payment systems company PS & S.
"It is my personal view that especially recipients of child grants should be exempt from these deductions because if this is not done, there could be widespread malnutrition if there was not enough money left after deductions to feed these children."
However, he said the issue is tricky because systems currently in place do not allow any intervention to stop the practice.
This is because payment systems companies have no way of knowing whether the person from whom the money is deducted is a grant beneficiary.
This matter is also in the spotlight after the National Credit Regulator (NCR) asked the National Consumer Tribunal to cancel the registration of Net1 subsidiary Moneyline Financial Services.
The NCR probed Moneyline and accused it of providing credit to social grant beneficiaries without conducting proper affordability tests to assess their debt-repayment history and monthly living expenses.
Moneyline in a statement rejected breaching any regulations.
"The use of child-support grants and foster-child grants as income for purposes of conducting affordability assessments on credit applications is totally unacceptable," said NCR CEO Nomsa Motshegare.
"It deprives children of money meant to provide for their daily necessities."
This issue was further highlighted by the Legal Resources Centre in Grahamstown, which said the Social Assistance Act prohibits deductions other than limited funeral insurance being made from social grants.
The National Payment System, however, enables the automatic deduction of debit order payments from bank accounts.
The South African Social Services Agency is also unable to prevent microlenders, financial services companies and airtime vendors from making debit order deductions.
- Fin24
