Black Sash Media Statements

Statement by the Min of Social Development, Ms Bathabile Dlamini, on unauthorised grant deductions.

6 May 2016

Special Advisor to the Minister, Mr Zane Dangor;

Members of the Ministerial Task Team;

Senior Managers from the Department of Social Development and SASSA;

Ladies and gentlemen of the media;

Good Morning.

Ma Grace lives in the small rural town Makwassie in the North West and receives an old age grant. She does not possess a cell phone yet was plagued for months with unauthorised advanced airtime deductions from her SASSA branded beneficiary bank account. When we learnt of her case, I instructed that she be refunded immediately and that these deductions must be stopped.

Similarly, Mr and Mrs Saptoe, both pensioners from Port Elizabeth, experienced multiple unauthorised R5 advanced airtime deductions from cellphone companies including Vodacom, MTN and Cell C all around grant pay day for several months. It took knocking on many doors for several months to stop these deductions. Advanced airtime is the main cause of deduction disputes, and is on the increase.

Doreen and Jacobus Juries from the Western Cape brought to our attention questionable marketing and sale of funeral insurance cases in Franschoek and Paarl. This was for funeral policies sold by Emerald Wealth Management for, underwritten by 1 Life. At the core of the Juries and other cases is the claim by funeral insurance brokers and salespersons that it was mandatory for grant beneficiaries to take out funeral policies.

With the support of civil society, the Juries family eventually got their paid premiums refunded alongside 16 others. We are told that Emerald Wealth no longer sell 1 Life policies. Emerald Wealth (now called Emerald Life) is now selling policies underwritten by Lion of Africa.

Ms Mlambo of Tweefontein, Mpumalanga will go down in history for exposing the phenomenon of an R800 deduction for water from the SASSA branded account, in an area with no itemised billing for water and in a township with free water provision. A plausible explanation of this deduction has yet to be offered.

Mr. Bani is an 88 year old pensioner from Nyanga in Cape Town. His bank statements exposed three sets of unauthorised and alleged fraudulent loan deductions from credit service provider, FAJ Financial Solutions. Mr Bani was expected to cancel a debit order he never authorised via a telephone to a number in Uitenhage. After months of hardship Mr. Bani eventually found relief. The explanation offered by FAJ Financial Solutions was that one digit in the credit reference was wrong, and as a result he was inadvertently paying someone else's loan. There are worrying questions of how this company obtained Mr Bani's personal confidential data and banking details and how they were able to make monthly debit deductions from his grant.

Mrs Gxabela receives a Child Support Grant of R350 per month. For the past three months she received no grant payout and was instead billed with advanced airtime and electricity she never purchased or authorised. She was told that in order to secure a Moneyline loan she had to sign up for an Easy Pay Everywhere bank account; a product of Grindrod bank and Moneyline.

She agreed to open up an Easy Pay account to get her loan paid into it. However, in practice this meant that her monthly grant payments were automatically diverted from her SASSA account to her Easy Pay account. No one pointed her to the fine print in the agreement that automatically allows for her money to be transferred from her SASSA branded card to her Easy Pay account, nor did anyone get her explicit consent for this. When she wanted to cancel the Easy Pay account, a Moneyline official told Mrs Gxabela that local branches do not cancel the Easy Pay Everywhere bank account.

They only issue these cards and that she, who lives in Khayelitsha, Cape Town, must phone their office number in Gauteng if she wants to cancel the account. Mrs Gxabela's husband tried to call this number but the number was seldom answered and if it was answered they constantly kept him on hold until he ran out of airtime. Mrs Gxabela and several other beneficiaries found it near impossible to cancel the Easy Pay accounts.

Earlier this year, we published a set of Regulations for public comments aimed at clarifying existing legislation in terms of what is legally permissible and the level of consent required for a deduction from a social grant. We received a flood of comments from the financial services industry asking us why we are doing this. Why do we want to restrict people's rights to choice? Why are we going against the goals of financial inclusion and creating access to financial products for low income earners?

My answer is simple. We are doing it for Ma Grace, for the Saptoe and Juries families, for Ms. Mlambo, Mr. Bani, Mrs Gxabela, and the thousands of others like them, who have become victims of predatory practices which seek to exploit the gaps in the current regulatory framework for the financial services sector. South Africans have a Constitutional right to social security, and the primary goal of social assistance is to alleviate poverty. The beneficiaries should receive the full value of the grant unencumbered. It is very easy to take the money of social grant beneficiaries without proper consent and controls. However, it's very difficult for them to get their money back.

Last year, of the 13 thousand plus disputes recorded and investigated 77% were resolved in the beneficiaries' favour. Unfortunately, we are being overwhelmed by disputes and many are not even recorded. In February alone, SASSA got more than 40 thousand queries.

We aim to stop this practice, by ensuring that third parties can't simply take someone's grant. We appalled that the industry doesn't see this as a problem. We are also deeply disappointed in Cash Paymaster Services, the service provider appointed by SASSA to pay social grants. Instead of carrying out their 'organ of state' function as clarified by the Constitutional Court to implement the applicable laws and control these deductions, CPS seems to be profitably participating in these questionable activities through subsidiary companies, under the umbrella of their parent company Net 1.

Today, after consideration was given to all the public comments, we are glad to announce the publication of the revised Regulations to the Social Assistance Act. This will put an end to the tide of unauthorised and unlawful deductions and ensure better control of Sections 21 and 26A which deals with the payment environment.

We have been in consultation with the National Treasury, the South African Reserve Bank and the Financial Services Board and believe that there is an in-principle support for these regulations.

The revised Regulations firstly seek to clarify aspects of the existing regulations, which the industry have found ways to bypass. It now makes it clear that a beneficiary must in person provide written permission to SASSA for a deduction. Where they cannot do this in person, SASSA will assist the beneficiary either through a home visit or other means in accordance to their policies.

The amendments to the Regulations now accurately reflect the fact that only insurers registered under the Long-term Insurance Act of 1998 may offer funeral policies. This is important in facilitating access to funeral policies by social grant beneficiaries in a way that offers adequate consumer protection and ensures that funeral benefits are indeed made available to the beneficiaries when a death occurs.

Further, payments for funeral policy premiums will now only be made directly to the insurer that is responsible for providing benefits under the policy. No payments to brokers will be allowed.

This will ensure a direct relationship between the insurer and the social grant recipient, and ensure that insurers have direct access to policyholder information. This will go a long way in ensuring that funeral benefits are paid timeously and directly to the beneficiaries. We have also noticed that some brokers, when faced with a case of misrepresentation, often refund premiums paid from their own funds. This is probably because they know if the case goes to the insurance underwriter and they are found guilty they will forfeit their licence.

These amendments will also assist SASSA to work with the Financial Services Board to ensure that social grant recipients and their beneficiaries are treated fairly.

Funeral deductions from children's grants will not be allowed. Regulation 26A was intended for adult grant beneficiaries. The amended Regulations seek to clarify this original intent by limiting funeral policy deductions to adult grants only. Lastly, these Regulations will also clarify the payment options that are in existence for social grant beneficiaries. There have always been two options; either the beneficiary's own personal bank account or through the SASSA payment mechanism.

The Agency's use of banking facilities is not equivalent to a beneficiary's personal bank account. Thus this payment method is subject to the provisions of the Social Assistance Act and its regulations. Today the CEO of SASSA will send an instruction to CPS to remove the debit order facility from the SASSA branded card.

We have consulted with the South African Reserve Bank and the Payment Association of South Africa and together we believe this is a necessary intervention to stop deductions.

I have approved the recommendation for a SASSA owned and controlled recourse system to be in place and for beneficiaries to be refunded back dated to 2012. We are pleased to report that a recourse system is in place. We want to accelerate our progress and have agreed to further improvements to the system through:

· A 24-hour, seven days a week, toll free number including calls from cell phone numbers which will be in place shortly;

· On-site SASSA Commissioners of Oath will commission affidavits so that beneficiaries are not sent from pillar to post to complete the necessary dispute forms. We thank the SAPS for their support and request that they continue to assist SASSA with the commissioning of affidavits as we manage the transition;

· Each SASSA facility has a dedicated team to deal with deduction disputes and will do everything possible to provide a dignified service, with a quick turnaround time. Ongoing training is in place to ensure that all SASSA staff are familiar with the disputes procedures and can support beneficiaries in a professional manner;

· There is a plan in place to fast track cash refunds including via the Integrated Community Registration Outreach Programme (ICROP) and Project Mikondzo;

· SASSA has launched a specific communication strategy targeting beneficiaries to ensure that they know how to lodge and follow-up on debit deductions disputes;

· Furthermore, SASSA now has uniforms and name tags to distinguish staff from other service providers. Beneficiaries have to make sure they deal with bona fide SASSA officials and not those who claim to represent SASSA.

To grant beneficiaries, we would like to encourage them to monitor their SASSA branded account statements carefully, continue to register any deductions and follow-up on the resolution of their dispute.

A new challenge has emerged called Easy Pay Everywhere (also referred to as the Green Card). It is a bank account issued by Grindrod Bank (on behalf of Moneyline, another subsidiary company of Net 1). We are currently investigating cases where sales staff have allegedly told beneficiaries they needed an Easy Pay bank account to receive social grants, as their SASSA branded cards are invalid. They all pay a R10 monthly service fees and a fee for all cash withdrawals. Services on the SASSA branded card are free in the SASSA network.

Another cohort were told that they needed an Easy Pay account to receive a loan from Moneyline, only to subsequently discover that funds on their SASSA card are automatically transferred to the Easy Pay card. Attempts to cancel the Easy Pay account are near impossible. It appears as if you need to pay R150 to cancel the card. You can also only cancel the card via a Johannesburg call centre number as Moneyline offices or agents around the country only open the bank accounts. Grant beneficiaries need to be careful of who they open bank accounts with, and that they are able to establish a relationship with a bank, if they wish to go that route. We strongly discourage banking with institutions that cannot provide such a service.

In November 2015, SASSA submitted to the Constitutional Court a timetable with milestones for the in-sourcing of the national payment of social grants. SASSA has various work streams in place to ensure take over by 1 April 2017. The Ministerial Task Team is engaging a range of stakeholders including the South African Reserve Bank (SARB), National Treasury and the Payment Association of South Africa (PASA) that support the intention to create a ring-fenced bank account to protect social grant beneficiaries from unauthorised, unlawful and fraudulent deductions.

The Ministerial Task Team to stop deductions was established in February 2014 and comprised of officials from the Department of Social Development, SASSA and civil society led by the Black Sash. The work of the Task Team will continue to ensure that the legislation and the recommendations that I approved, are implemented and that social grant beneficiaries get recourse.

We are indebted to people who volunteered their cases and experiences through our civil society partners. These cases are helping tremendously to fix the recourse system and identify legislation, policy and systemic gaps. All deduction cases big and small are an affront, but we want to thank particularly: Ma Grace, the Saptoe family, the Juries family, Ms Mlambo, Mr. Bani and Ms. Gxabela, some of whom are with us here today.

We urge all to support our efforts in ensuring that this scourge is rooted out and that justice prevails.



Media inquiries: Lumka Oliphant 083 484 8067 or This email address is being protected from spambots. You need JavaScript enabled to view it.