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Net 1 hits back at SASSA

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 17 Jun 2016
Net 1 slams SASSA for not filing criminal charges against other financial institutions that also deducted money from social grant beneficiaries' bank accounts.
Net 1 slams SASSA for not filing criminal charges against other financial institutions that also deducted money from social grant beneficiaries' bank accounts.

Net 1 UEPS Technologies (Net 1) has criticised the SA Social Security Agency (SASSA) for not filing criminal charges against the other financial institutions that carried out "illegal" deductions on the bank accounts of social grant recipients.

In a statement, Net 1 said: "It is not clear why SASSA has not yet filed similar criminal charges against the approximately 1 300 other financial institutions (including most of the major South African banks), who submitted debit orders against the bank accounts held by SASSA beneficiaries during the June payment cycle, or if it intends to do so in order to be consistent in its approach."

This week, SASSA filed criminal charges against Cash Paymaster Services (CPS), a Net 1 subsidiary responsible for distributing grants, and Grindrod Bank, for failing to comply with the newly amended regulations in the Social Assistance Act, which prohibits deductions from the bank accounts held by grant beneficiaries.

SASSA contends the deductions made on social grant beneficiaries' money are illegal and that Net 1 has abused its position as the contractor handling social grant payments to more than 15 million South Africans.

To prevent these deductions, the Department of Social Development moved to introduce amendments to a section of the Social Assistance Act, whereby nobody would be allowed to deduct money from a SASSA beneficiary's account, as of 1 June.

In terms of the amendment, deductions from social grants are prohibited, with the exception of a deduction for a funeral policy' provided SASSA is requested to authorise it.

Face-off

According to Net 1, SASSA's action to bring charges against the company follows the 3 June announcement that Net 1 had filed for a declaratory order with the South African High Court to provide certainty on the interpretation of the regulations in the Social Assistance Act.

"SASSA indicated that it will oppose the company's application, but has not yet filed an answering affidavit, which is due on 20 June 2016," says Net 1 in a statement.

It adds SASSA's legal action is difficult to understand in light of its application with the High Court.

The company has already been joined in its application by several other industry participants, and the South African Reserve Bank (SARB) has also indicated it will not oppose the application. Further, the SARB will file an explanatory affidavit setting out its position concerning the effects that new regulations will have on the national payment system regulated by the SARB, states Net 1.

Dhruv Chopra, Net 1 head of investor relations, reiterated to ITWeb: "We are not aware of anyone aside from SASSA who opposes our application. If the interpretation of the Act is unclear on such a critical point, it is only just that all parties concerned, including beneficiaries and industry, are made aware what restrictions, if any, can be imposed by SASSA. We believe there are none."

The High Court hearing on Net 1's application has been scheduled for 28 June.

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