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Govt takes legal action on social grant lenders

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National Minister for Social Development Bathabile Dlamini on Thursday said the department and the South African Social Security Agency (Sassa) are pursuing legal action against the company contracted to pay out funds to social grant recipients. Cash Paymaster Services (CPS) has been the alleged source of much dismay to many beneficiaries who have laid complaints against the company and some of its affiliates. According to the findings by a special Ministerial Task Team set up by Dlamini, CPA has engaged in the immoral debit deductions from the accounts of many recipients of Sassa benefits.

“We want our people to know the work has begun, and we will not stop; even though we have received a letter from the CEO of CPS saying he will take us to court one by one [but] we will continue. We have started the work, and we are going to be following the legal route to find an end to this. And we have not only communicated through letters, we’ve had various meetings to discuss the matter with them,” she told journalists at Parliament.

She explained that although the loans and deductions may technically be legal, they come across as immoral and exploitative of the poor. She says the MTT has found that money lenders do not carry out risk and affordability checks, leaving beneficiaries in a cycle of debt collection.

“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. 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 contract compels CPS to protect the confidential information of grant beneficiaries, including biometric data gathered during re-registration in 2012.”

Dlamini said government, her department, as well as the Department of Trade and Industry and Civil Society groups will continue to monitor the situation and pursue proper recourse for all Sassa beneficiaries slighted by the internal deductions of funds supposed to be untouched by the service provider. VOC (Andriques Che Petersen)

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