Update March 24 2015
Constitutional Court acts decisively to birth new SASSA tender
The Concourt continues its oversight of the new SASSA tender process ,and today closed the option for any litigating party to seek relief from any other court.
The Black Sash Trust joined the AllPay 2 Constitutional Court matter on Friday, 13 March 2015 as a Friend of the Court (amicus curiae). Unlawful and fraudulent debit deductions by third parties from the bank accounts of grant beneficiaries persist under an invalid contract for the national payment of social grants awarded to the current provider, Cash Paymaster Services (CPS).
National Director, Lynette Maart, said the Black Sash is glad that the Concourt has acted swiftly to ensure that the new tender is awarded and implemented in the interest of grant beneficiaries. We are pleased about the Concourt ruling to finalise and implement the new tender without further delay.
Key milestones with timeframes include that the RFP be circulated to prospective bidders and the Concourt by 17 April 2015; bids be submitted by 17 May 2015; and SASSA award the new tender by 15 October 2015. Furthermore any further relief by parties, such as CPS, will have to be channelled through the Concourt, and on very limited grounds.
The Black Sash remains committed to act in the best interest of the social grant beneficiaries, and to bring to a swift end these unlawful and fraudulent deductions.
Update March 19 2015
The Concourt intervenes decisively to finalise the new SASSA tender process
Unlawful and fraudulent debit deductions from the SASSA branded bank accounts of beneficiaries persists under the current invalid CPS tender for the national distribution of social grants. The new SASSA Request for Proposals (RFP) outlaws electronic fund transfers (EFT), debit and stop order deductions from these bank accounts.
The Black Sash, admitted as Amicus Curiae by the Concourt on 13 March 2015, sought swift resolution of the new tender process in the interest of grant beneficiaries. Through our legal team, the Legal Resources Centre (LRC), we requested relief from the Constitutional Court including:
• A declaration that the RFP (as it exists or with specified amendments) is valid;
• A declaration preventing parties from approaching the Constitutional Court for further relief unless it is necessary to protect the interests of beneficiaries; and
• A timeline for the finalisation of the new tender.
On 19 March 2015, the ConCourt ordered SASSA to implement the timetable detailed below:
• Circulate the RFP to prospective bidders by 17 April 2015
• All bids to be submitted by 17 May 2015;
• Award the new tender by 15 October 2015
The ConCourt reserved judgment on paragraph 5 "Directing that the parties may only approach this Court for further relief if it is necessary to protect the interests of beneficiaries".
The Black Sash is pleased that the parties could agree on a timetable for the new tender process. The challenge is now to ensure that all parties keep their end of the bargain and adhere to the timetable particularly, CPS and SASSA.
Update February/March 2015
Grant Grabs: Special Assignment TV documentary
On 1 March 2015, Special Assignment (SABC 3) screened Grant Grabs, a documentary exposing unlawful and fraudulent deductions from hundreds of pensioners and other social grant beneficiaries' accounts. The production team travelled across 5 provinces in South Africa to interview affected grant beneficiaries. Black Sash, the Human Rights Commission and CPS/Net1 also gave their perspectives on the issue.
Update October/November 2014
New SASSA Tender RFP prohibit unlawful and fraudulent deductions.
On 28 October the Black Sash and strategic partners attended the SASSA Bid briefing meeting in Pretoria to appoint a new service provider for the administration of social grants nationally. We have acquired the Tender Bid specifications to prepare for the meeting. The RFP reflected the Ministerial Task Team recommendations to protect the bank accounts of social grant beneficiaries/ recipients from EFT debit deductions on behalf of third party creditors. Below are detailed all the provisions:-
The Payment Tender 2014 SASSA 11/14/BS BID for Provision of Services for Social Assistance:
· Page 12: Section A, Sub Section 4. Positive gains of the current payment system (for noting)
· Page 15: Para 3.9 The Bidder/shall take all such steps as may be reasonably necessary to prevent confidential information coming into the possession of unauthorized third parties. In protecting the Bidder/s (beneficiaries’) confidential information, SASSA shall use the same degree of care to prevent the authorized use or disclosure of the confidential information.
· Pg 16 & 17:
5.3 Special Technical Mandatory Conditions
The following technical requirements are mandatory. Bidder/must respond to all elements listed. If the Bidder/s fails to propose a solution to any of the listed categories, that Bid will be automatically eliminated from the evaluation process.
Biometric identification is a mandatory requirement which will be used for monthly proof of life before all payments for all recipients (scoring method, signature)
The Bidder/s agree that there will be NO payment transfers, EFT debits, stop orders, deductions or other services facilitated through the beneficiary accounts unless expressly authorized by SASSA (scoring method - agree/not agreed, signature)
The Bidder/s agrees to a Firm Price of a maximum of R14.50 (all inclusive – service and VAT) (scoring method, signature)
· Pg 19: Sub Section 8 Interpretation – detailing the list of legislation applicable in the process of adjudication of the Bids
· Pg 30: Sub Section 4.4 Beneficiary Account Management
4.4.1 Opening of Special Beneficiaries Bank Accounts (Ring-fenced Beneficiary Accounts)
220.127.116.11 The Successful Bidder/s will be required to open individual special accounts for each of the Beneficiaries. The account will be linked to the Biometric Payment Card discussed in 4.4.2 below.
18.104.22.168 The Successful Bidder/s will be expected to transfer the money to the individual beneficiary accounts in line with the Payment file.
22.214.171.124 The Bidder/s must ensure that the beneficiary account is restricted to the payment of Social Assistance and any other Social Security related Benefits, as directed by SASSA only. No other products or services can be introduced or marketed to Beneficiaries by the Successful Bidder/s, its partners or any other party.
126.96.36.199 The account shall enjoy the following free benefits:
- 188.8.131.52.1 One (1) deposit per month in accordance with 184.108.40.206
- 220.127.116.11.2 A maximum of three (3) withdrawals monthly
- 18.104.22.168.3 A maximum of three (3) enquiries per month
22.214.171.124.4 One (1) mini-statement and one (1) full statement covering up to a maximum of three (3) months per month
- 126.96.36.199.No interbank or interchange fees
- 188.8.131.52.No minimum balance requirement on account
- 184.108.40.206.Free PIN Reset
- 220.127.116.11.Free first Card Issue and first Card replacement
- 18.104.22.168.No account opening fee
22.214.171.124 No EFT debits or stop orders shall be allowed on the accounts (foot note 11 Exceptions will only be considered in terms of 126.96.36.199.
- 4.4.1.In terms of the Social Assistance Regulations (Regulation 26(A)), Beneficiaries may request SASSA to effect deductions for funeral policies up to a maximum of 10% of the grant value. SASSA will authorize such deductions and the Successful Bidder/s will be given such instructions with the Payment file.
CPS, in a legal submission to the Constitutional Court on 5 November 2014, asked that the new SASSA tender specifications be amended or documents be set aside. Arguments advanced by CPS include– the biometric specification linked to the banking system is unlawful and inadequate provision is made for the proper handover between the old and new bidder and will therefore disrupt the grant administration system. SASSA refutes these claims, arguing that the biometric specification is tied to Proof of Life and not the banking system.
Definition of Grant Recipient or Recipients includes beneficiary, primary care giver or procurator who receives one or more Social Assistants Grants.
Update September 11 2014
Department of Social Development Minister Dlamini made a statement today in which she accepted all the recommendations by the Task Team, and spellled out how the Department would work to resolve the various issues:
MEDIA STATEMENT BY THE MINISTER OF SOCIAL DEVELOPMENT, MS BATHABILE DLAMINI, MP ON THE OCCASION OF THE MEDIA BRIEFING ON UNAUTHORISED DEDUCTIONS
Thursday, 11 September 2014
When we designed the new payment system for social grants, our intention was to ensure that the poor and vulnerable in our society access their constitutional entitlements with dignity.
The new payment system sought to facilitate financial inclusion so that social grant recipients had access to bank accounts that would allow them to access their funds safely within the framework of the financial infrastructure that all of us enjoy.
It was also our intention that through banking the poor, we would reduce their vulnerability from the greed of money lenders or omashonisa who charged exorbitant interest rates. The new system was also geared towards closing the leakages associated with the old cash-based payment system and rooting out fraud and corruption.
While we have made significant gains in all of these areas, it became clear that the entrance of the SASSA payment card into the open loop banking system provided for a new frontier of exploitation of the most vulnerable members of our society.
In my Budget Vote speech to Parliament in July this year, I indicated that I had received many complaints from beneficiaries about deductions that they had not authorised. These include loan repayments, prescribed debt, multiple funeral schemes, advance electricity and airtime, often without their knowledge or consent. Our investigation found cases of multiple deductions involving Old Age Grant. In one case, a beneficiary's account was debited for "airtime" by different network companies.
I want to take this opportunity to reiterate that Government does not provide any loans or extend credit to grant beneficiaries through the SASSA card. Also, Government does not endorse or support any financial services products such as short and long term insurance, funeral schemes or cellphone airtime.
Ladies and gentlemen, this growing national phenomenon of unlawful and immoral debit deductions is unacceptable in the sense that while some of these deductions may be technically legal, they remain immoral as they serve to rob the poor from the resources that we as South Africans provide for them, to meet their basic needs. Worse still, the money lenders do not even carry out appropriate risk and affordability checks as required by law. This exacerbates their vulnerability and in turn drives borrowers into a vicious cycle of never-ending debts.
Based on the growing number of complaints from social grant recipients made directly to me and those submitted to NGOs, I appointed a Ministerial Task Team (MTT) in February 2014. The Team is made up of representatives of Black Sash, the Association for Community Advice Offices in South Africa (ACAOSA), other civil society partners, DSD and SASSA. It was mandated to explore the nature of the deductions, provide recommendations to stop them, and ways to ensure that grant recipients had access to appropriate recourse.
I must at this point also indicate that I recently received an enquiry from the Public Protector on this matter.
On August 27 2014 the Ministerial Task Team (MTT) submitted a report to me with their findings and recommendations.
The following issues emerge from the report:
Since 2012 when the contract to pay social grants, was awarded to Cash Paymaster Services (CPS), a wholly owned NET 1 subsidiary, the rate of debit deductions from grant beneficiaries appeared to increase significantly. These deductions were made from SASSA-branded Grindrod bank accounts into which the social grants are paid.
The Team found evidence of other financial institutions that may be linked to Net 1 holdings which is a holding company of CPS that offer financial products including micro-loans to grant beneficiaries.
The deductions associated with these products are then deducted via EFT payment system within the national payment system.
These practices are in contravention of the Social Assistance Act, Regulations of the Social Assistance Act and the SASSA Act.
The legislation allows for the social grants not be burdened or ceded and allows for one deduction not exceeding 10 percent for funeral insurance only. Furthermore, the contract compels CPS to protect the confidential information of grant beneficiaries, including biometric data gathered during re-registration in 2012.
It appears that loan repayments are pre-loaded before the social grant amount is transferred into the bank account of the beneficiary. Also, access to grant beneficiaries' confidential data - including identity numbers, bank account and contact details, biometric data, appear to fuel the marketing and sale of financial products including loans, the Umoya Manje products of advance airtime and electricity coupons.
What is more alarming is that civil society brought to the attention of the MTT that even debit deductions were made for the purchasing of water, which is a free basic service. Emerging evidence from the case studies presented during the MTT working sessions revealed that "Big Sharks in suits are now in the tank" with almost unrestricted access to funds in the bank accounts of grant beneficiaries.
They loan money to the poor specifically those with debt problems and those who have never applied for loan before. This is in opposition to one of the intended outcomes of the new payment system which was to protect social grant recipients from the predatory practises of loan sharks and other illegal acts of lending money.
Many social grant beneficiaries have struggled, with very little success to secure recourse. Disputes lodged with the bank and the service provider take months to resolve. Debit deductions for loans are in most instances disputed by CPS officials. They often claim that loans were granted using biometric data. Also, promises to refund deducted amounts are often not kept and many beneficiaries are kept waiting for their money.
The refunds exclude interest or service fees and the additional bank charges. Seeking recourse appears particularly challenging and expensive for those living in rural areas. Besides having to fork out additional transport fees to get to their nearest service point to lodge a complaint, there are airtime costs associated with calling what is supposed to be a Toll Free number.
Many grant recipients resort to seeking the help of their local advice office or community based organisation or just give up. All social grants are paid into banks accounts. Ten million bank accounts service 16 million beneficiaries, these accounts are at risk as 'ambush' marketing and fraudulent sales is on the increase.
Currently, these accounts appear to have little security, fraud or risk protection against these acts of illegal money lending practices. It is of great concern to me that these deductions are eroding the gains made by our democratic government over the past 20 years in term of the progressive realisation of social security and its impact on reducing poverty and inequality. The impact of the deductions has seriously compromised the dignity of grant beneficiaries. It continues to fuel indebtedness which reduces the quality of life of the poor.
The social assistance grants provide poor households with the means to meet their basic needs, especially food and we cannot allow these solidarity funds to be eroded to enrich a few unscrupulous business people. We need to restore the confidence in the social grant payment system.
As the responsible Minister, I accept all the recommendations made by the MTT, some of which are detailed below. The Ministry of Social Development, the affected government departments and civil society will work together to realise the following:
• design and implementation of a SASSA-owned and controlled recourse system in place to ensure that unlawful and immoral debit deductions are stopped and refunded with interest and bank changes, and where necessary backdated to 2012.
• SASSA and DSD will ensure that CPS, which according to the Constitutional Court judgment is performing a state function through the payment of social grants, complies with all the relevant legislation and regulations. This will include measures that will restrict third party creditor access to the social grant bank account
• the payment systems must be designed in such a manner that social grant beneficiaries' bank accounts are off limits to creditors.
• DSD and SASSA block and reverse with immediate effect any debit deductions for Umoya Manje services, loans and any other financial service providers other than legal 26A deductions.
• DSD, South African Reserve Bank, the Competition Commission and the National Treasury, need to scrutinise the imminent Grindrod Bank/ Bidvest sale and intervene decisively if necessary, to protect the 10 million social grant beneficiaries' bank accounts from further unlawful and immoral debit deductions and abuse of their confidential information.
• We will engage with the South African Reserve Bank to issue a Directive in terms of Section 12 of the National Payment System Act, in the public interest, to protect the SASSA bank accounts and confidential information of grant recipients.
• DSD will strengthen the Social Assistance Act Regulations, and related legislation to stop the use of social grants as collateral for loans and hold reckless lenders to account. DSD and SASSA as the mandate carriers for social security will work collaboratively with the Department of Trade and Industry, the National Credit Regulator, and other government departments and public entities, to enforce the changed legislation.
• We will also move speedily to establish the Inspectorate for Social Assistance as envisaged in the Social Assistance Act of 2004.
The Ministerial Task Team will continue to monitor and ensure the implementation of the recommendations by the respective parties and to report periodically on progress against targets. As Government we have both a legislative and moral duty to take action against those who feed ruthlessly on the vulnerability of the poor.
I thank you.
Update August 2014
The increasing phenomenon of unlawful and unauthorised debit deductions from the SASSA bank accounts of grant beneficiaries is taking place across South Africa. Efforts to stop these unlawful deductions are part of the Black Sash's Hands off our Grants (formally known as Stop CPS-SASSA Debits Campaign). Part of our ongoing campaign work includes the Black Sash serving on a Task Team set up by the Minister of Social Development on 26 February 2014 to explore solutions to these deductions.
Since the establishment of the Ministerial Task Team (MTT), 8 meetings were held from February to August 2014. 4 meetings have also been held with senior officials of South African Reserve Bank (SARB), National Credit Regulator (NCR), National Treasury & SASSA CEO. Findings and recommendations on the MTT's work thus far, were made in a comprehensive report and presentation to Minister of Social Development, Bathabile Dlamini, at Parliament on 27 August 2014.
A press statement will be released shortly on the findings and the process going forward. We anticipate that the findings may speak to the loans, the sale of advance airtime and electricity, water deductions and the use of grant beneficiaries' confidential data.
For additional information about our Campaign, please also follow us on Facebook www.facebook.com/BlackSashSouthAfrica or Tweet @black_sash using #handsoffourgrants
Update July 2014
The Ministerial Task Team met twice again in July 2014. It also held meetings with the National Treasury and the National Credit Regulator (NCR).
The focus of the Task Team meetings (7 and 14 July) was to work on a report to be tabled with the Minister of Social Development by the end of July, 2014. The report will have the following elements: Background to the problem; A deep analysis of the problem statement, including the legal imperatives against which it takes place; Stakeholder analysis; and Specific recommendations to the Minister (interim and long-term).
The meeting with National Treasury (7 July) was an exploratory one focusing on the consumer credit sector and how unscrupulous lenders exploit poor consumers. We also focused on the issue of the current structure of bank accounts and the banking system and how this allows unlawful deductions. They noted a new system to be implemented shortly called the authentification of credit transfers (ACT's). We also confirmed what possible solutions to the problem lie within the mandate of National Treasury, e.g. curtailing activities in bank accounts, and structuring bank products with more safety features.( See note below regarding a recent related report.)
In the meeting with the NCR, it gave an undertaking to speedily follow up cases of reckless lending and unsolicited marketing by service providers. It was reassuring that they have the powers to remove licences of commercial entities that are guilty of violations. National Credit Act regulations will be published shortly.
Note: A joint report published by the Financial Services Board and the National Treasury points to the extent of abuses in the Consumer Credit Insurance "market". The government aims to ultimately deal decisively with abuses in the CCI market, as part of a wider initiative taken by Government to deal with the problem of household over-indebtedness, and to ensure that consumers are treated fairly by financial sector providers - to download this report, please visit www.treasury.gov.za/public%20comments/CCI/
Update June 2014
Two Ministerial Task Team meetings were held in June. On June 2 we met in preparation for a meeting on June 19 with the SassaCEO. The latter meeting explored efforts by Sassa to stop the unlawful deductions from grant recipients' accounts.
Update May 2014
At a task team meeting held on 12 May with the Task Team and SASSA, SASSA presented their proposed recourse options for grant beneficiaries. We found the recourse options unclear, problematic and highly inadequate. Our letter to SASSA on 28 May made explicit our objections which included: no provision was made for illiterate beneficiaries, toll free numbers are often not functional, grant beneficiaries carry the cost of making the calls from cell phones, and turn-around times are not clearly spelled out for recourse to be actioned. Furthermore, the recourse system is completely reliant on CPS, with little or no intervention from SASSA, to arbitrate disputes between other NET1 subsidiaries and grant beneficiaries. A document was sent to SASSA outlining the above problems. The letter also details our suggestions for recourse going forward. Various role-players including the South African Reserve Bank, Department of Trade and Industry, National Credit Regulator and the National Treasury will meet during the week of 18 - 20 June. The meeting with the Reserve Bank will further explore the process of obtaining a Directive 12 in terms of the National Payment Systems to ring-fence grant beneficiaries' bank accounts to stop creditors' and service providers' access. The meeting with the National Credit Regulator will focus on mechanisms to stop the use of grants as collateral for loans, criminalising loan sharks, and follow up on cases of reckless lending lodged with the Regulator.
Update April 2014
Ministerial Task Team Meeting with the South African Reserve Bank (SARB) 29 April 2014
The Black Sash as part of the Ministerial Task Team for the "Hands off our Grants" Campaign met on 29 April 2014 in Somerset West to explore with the SARB ways to stop unlawful, undocumented and unauthorised debit deductions from the bank accounts of SASSA beneficiaries.
The Black Sash and partners presented a written submission providing an overview of the campaign to date since the November 2013 Black Sash letter to SARB, typology case studies to inform and analyse on-the-ground experiences of debit deductions experienced across South Africa; and stating their urgent request to the SARB to issue a directive in terms of Section 12 of the National Payment System Act 78 of 1998 to protect Grindrod Bank linked accounts into which social grants are paid by CPS/SASSA.
SARB Officials cautioned that such a directive could take up to two years and may be subject to consultation with commercial banking sector stakeholders. Other issues covered in their verbal response included how SASSA and the SARB are working on building safeguards into the banking system to protect the SASSA bank accounts of grant beneficiaries, and ring-fence materialised risks. There was also discussion about how to bring relief for individual cases (particularly where deductions were unauthorised), and to test where best to make changes to the banking system. The SARB will communicate various options in the future.
The task team set up a formal meeting with the National Credit Regulator (NRC) to explore issues including prohibiting the use of social security grant as collateral for loans, reckless lending, and criminalising defaulting lenders.
A meeting, planned for May 2014 plans to focus on the adequacy of the recourse system and mechanisms with the view to obtain administrative justice for grant beneficiaries experiencing unlawful and unauthorised debit deductions.
Ministerial Task Team
The escalation of unlawful and unauthorised debit deductions from the bank accounts of social grant beneficiaries have caused untold hardship as detailed in case studies that we are collecting. An open letter, outlining five key issues, written to Minister Dlamini of Social Development and SASSA's Chief Executive Officer Ms Virginia Petersen and copied to various other government departments including DTI, National Treasury and Chapter 9 institutions led to a delegation of 10 people meeting Minister Dlamini and her team on 26 February 2014 (see below). Some of outcomes of this meeting were: immediate relief for Ma Grace, a pensioner from Makwassie in the North West province for airtime deductions made from her SASSA bank account over a period of months when she does not own a cellphone; the reopening of the SASSA office in Adelaide effective from 2 May 2014; and a task team to explore and consider remedies to stop the unlawful debit deductions from the bank accounts of social grant beneficiaries. The Ministerial task team is scheduled to meet the South African Reserve Bank (SARB) on 29 April 2014 to consider systemic remedies.
Constitutional Court orders a new tender process in the case between ALLPAY vs SASSA and Cash Pay Masters
The Constitutional Court judgement of April 2014 is significant for few reasons. Judge Froneman, citing the judgement of Yacoob J in the matter of AAA Investments "Our constitution ensures .... that government cannot be released from its human rights and rule of law obligation simply because it employs the strategy of delegating its function to another entity". The contract between Cash Paymaster Services and the South African Social Security Agency (SASSA), an organ of state, for the provision of the country-wide administration of the payment of social grants "is fundamentally public in nature". An organ of state, (DSD and SASSA) remains accountable to the people of South Africa for the functions performed by Cash Paymaster Services. When Cash Paymaster Services concluded a contract with SASSA in 2012, to perform a public function, it too became accountable to the people of South Africa. The performance of public functions by any third party brings with it public scrutiny, both in its operational and financial aspects.
Black Sash Submissions on the NCR
The Black Sash made a Submission to the Portfolio Committee for Trade and Industry on the National Credit Amendment Bill on 11 February. Key recommendations in our submission included the request to prevent the grant amount received from government to be considered as collateral for loans (that were unlawful), and also to criminalise lenders who then encumber these grants as collateral. The Portfolio Committee of Parliament invited the Black Sash to make further recommendations in the 18th of February 2014, which we did. The latter submission was made to further strengthen proposals of the former. Read our submissions.
Update February 2014
Minister Dlamini Meets Black Sash and Campaign Partners on our Hands off our Grants Campaign
In February, Black Sash and partners (list below*) met with Social Development Minister Dlamini to discuss the crisis around unlawful debit deductions from grants.
Please see our presentation to the Minister which covered the following:
- Case studies presented by affected grant recipients from the North West and the Eastern Cape
- Progress on our campaign to stop unlawful debit deductions
- The problematic Service Level Agreement/Contract with CPS
- Hurdles that deny people their social security rights
- A call to the Minister to protect grant beneficiaries' much needed income
*Representatives from the following partners attended the meeting: The Black Sash, Legal Resources Centre (LRC), Centre for Law Society (LRC), UWC Community Law Centre - Parliamentary Liaison Unit, Section 27, Corruption Watch, ACAOSA (The Association of Community-based Advice Offices of South Africa), Katolieke Ontwikkeling Oranjerivier Northern Cape, Adelaide Advice Office Eastern Cape, Lebaleng Advice Office North West.
Update: 29 January 2014
The Black Sash, along with partner organisations and supporters of the STOP SASSA-CPS DEBITS CAMPAIGN, met with government officials to register the extent and impact of crisis facing millions of SASSA beneficiaries and their households. Our meeting on 29 January 2014, at Khotso House in Johannesburg, was the start of a sustained campaign to demand corrective responses and actions to the unauthorised, undocumented and unlawful debit deductions from the bank account of social grant beneficiaries. The gathering considered correspondence from the Minister of Social Development, communication with the Department of Trade and Industry, and direct engagements with senior staff of the National Treasury, National Credit Regulator and the Public Protector to carve a way forward.