Sassa account deductions to be curbed – Dept of Social Development

Decision will stop companies from dipping into money vulnerable people need for food and clothes

Sassa account deductions to be curbed - dept

1 June 2016

Cape Town - From Wednesday, June 1, nobody will be allowed to deduct money from a South African Social Security Agency (Sassa) beneficiary's account - with only one exception - the Department of Social Development said on Tuesday.

According to the department's acting director general, Thokozani Magwazi, the only deduction allowed would be for one funeral policy, and it could only be taken off the grant of a pensioner. It could also not be worth more than 10% of the total grant.

No deductions could be taken off any other SA Social Security Agency account holders.

This is in line with an amendment to the Social Assistance Act in May to stop companies from dipping into money that vulnerable people need for food and clothes.

This came after thousands of complaints from beneficiaries that money was being deducted for things like airtime credit, pre-paid electricity and micro-loans - sometimes without their permission.

The department found that funeral policies were even being deducted from children's grants and believed it was now able to put a stop to this.

Officials from the Department of Social Development were briefing the Western Cape Provincial Parliament's committee on social development on the problems with deductions on Tuesday.

4 778 fraudulent social grants

The executive director for grants at Sassa, Dianne Dunkerly, said that the department was also beefing up its dispute resolution mechanisms to deal with the growing complaints of unauthorised deductions, which were almost impossible to resolve or cancel.

Magwaza told the committee that the department was working towards making as much of the grant payment system as possible in-house again, except for the actual payment, which he conceded it would not be able to do. This would help protect the personal details of beneficiaries.

The department was also introducing an independent inspector.

He hoped that this would also go some way to stopping syndicates which have been committing grant fraud.

Last week, the Hawks, the Special Investigating Unit and Sassa's fraud unit arrested 14 people - including Sassa employees and Cash Paymaster Services employees - for alleged grant fraud.

The arrests were part of an investigation involving 4 778 fraudulent social grants worth over R34m.

Magwaza told the committee that, in spite of its concerns over Cash Paymaster Services (CPS) and the proximity to beneficiaries' details that its sister companies have, the department would have to keep using them until the end of March 2017 when its contract with them would end.

"We can't just cut them off suddenly," said Magwaza.

"There will be no payment and there will be fire in this country, and we won't be able to cope with it," he told the committee.

Unauthorised deductions

The department has been in and out of court over the grant payment system for years in a battle involving AllPay over the awarding of the contract to CPS.

CPS won and is allowed to continue providing the service until the contract ends in March 2017. The department was also ordered to find another company to manage the payments. Magwaza said that when bidders found out they would not be able to make deductions from beneficiaries' accounts, they backed off. This leaves CPS safe until the end of its contract, so that beneficiaries at least keep getting their grants.

The problems with unauthorised deductions surfaced in 2012, although they took a long time to be dealt with.

But it seemed that when it became clear that there would be a crackdown on deductions from Sassa accounts, a card called the EasyPay card was launched by a sister company to CPS - Grindrod Banking. The companies are held by Net1. Beneficiaries were either tricked or coerced into having their Sassa money paid into their EasyPay account, but then some started noticing deductions that they had not authorised.

According to a presentation by Black Sash, it was almost impossible for a beneficiary to close the account. Black Sash national director Lynette Maart described how beneficiaries questioning deductions from either their Sassa account or their EasyPay account are given the runaround.

She implored the department to make it impossible for financial services companies to make deductions from social grant money and for the department to regain control over the grant money.

Magwaza said that, on closer examination, the department discovered that Net1 had over 40 financial services companies and believed that EasyPay was introduced to get around a clause in the CPS contract which disallowed deductions.

An added complication was that in one copy of the contract with CPS, the clause preventing deductions was not signed, he said. Predatory financial services institutions The committee also heard that a dispute resolution mechanism was not as effective as it was supposed to be, because the toll-free complaints number was not free yet.

To lodge a dispute about a deduction, a beneficiary has to submit an affidavit signed by police or a commissioner of oaths, which involves more trips and immense effort by the beneficiary."It is unfortunate that predators saw this as an opportunity," he said."We don't want to go back to the old system of cash, where old people get mugged. But we want to curb access for predatory financial services institutions."He said they were told by the private companies that when the Sassa money reached a private account, the department had no say over how it was spent, according to banking regulations.

And, according to company law, it could not make CPS responsible for alleged activities by other Net1 subsidiaries, so for now, its hands were tied.

The only way a beneficiary could protect themselves from an unauthorised deduction was to completely ignore all offers of airtime, pre-paid electricity and other financial services through unsolicited cellphone calls, or if offered at a pension pay point.

The department sees Wednesday as a test of whether companies will comply with the new rules.

This article first appeared on News24, see here