New rules to protect grant receivers from immoral financial service providers

The new regulations are aimed at closing loopholes allowing direct deductions from beneficiaries’ accounts.

Minister of Social Development Bathabile Dlamini. Picture: Facebook.

CAPE TOWN - Social Development Minister Bathabile Dlamini has slammed financial services providers for resisting measures aimed at preventing unauthorised deductions from the accounts of pensioners and other people receiving social grants.

Dlamini says new regulations gazetted today are aimed at closing loopholes used by companies to make deductions directly from beneficiaries' accounts, often without their knowledge.

These include unauthorised deductions for funeral policies, airtime, insurance and other services.

She says last year more than 13,000 disputes were investigated and nearly 80 percent were resolved in favour of the grant recipient.

The minister says grants are meant to ease poverty, and companies directly accessing the accounts of pensioners and other beneficiaries are working against that aim.

"We are appalled that the industry does not see this as a problem."

She hit out at Cash Paymaster Services (CPS), the company appointed by South African Social Security Agency (Sassa) to pay out grants.

"CPS seems to be profitably participating in these questionable activities through subsidiary companies under the umbrella of their parent company, Net1."

Sassa intends taking charge of grant payments when the CPS contract expires at the end of March.

Minister Dlamini says that in future, grant beneficiaries will have to give the social security agency written permission before any deductions can be made from their accounts.

This is one of the measures contained in new regulations gazetted today under the Social Assistance Act.

"It [the Act] now makes it clear that a beneficiary must in person provide written permission to SASSA for a deduction."

Dlamini says Sassa got more than 40,000 queries about unauthorised deductions from grant recipients' accounts in February alone.

She says only insurers registered under the Long Term Insurance Act will be permitted to offer funeral policies, and no payments will be made to brokers.

Funeral policies will also no longer be allowed to be deducted from Child Support Grants.