By Ashliegh Brown, journalist, Justmoney
Moneyline Financial Services, a subsidiary of Net1, is being threatened with the loss of its registration and its ability to operate due to an alleged breach of the National Credit Act (NCA) in terms of their affordability assessments.
This came about when the National Credit Regulator (NCR) accused Moneyline of granting credit to the beneficiaries of social grants without conducting the proper affordability assessment. "Moneyline Financial Services transgressed various provisions of the NCA, the most repugnant one being that they granted credit to consumers receiving child support grants and foster child grants meant for the upkeep of children which grants were used as income for assessing the consumers’ ability to repay credit," said Nthupang Magolego, manager of Investigations and Enforcement at the NCR.
Furthermore, the NCR have requested that the National Consumer Tribunal (NCT) cancel Moneyline’s registration as a credit provider.
Magolego went on to say that: "The impending amendments to the current legislation will bring some changes to the way affordability assessments are conducted."
Previous accusations
Earlier this month, Net1 UEPS Technologies, was accused of making illegal deductions from the bank accounts of social grant recipients, reported BDLive. This was due to the fact that the Cash Paymaster Services (CPS), which Net1 uses, was accused of being able to access personal information from the grants beneficiaries’ database.
“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,” said Coceko Pakade, the deputy-general of social development in a statement.
Pakade added that since 2012 when the contract to pay social grants was awarded to CPS the rate of debit deductions from grant beneficiaries appeared to increase significantly. “These deductions were made from South African Social Security Agency (SASSA) branded Grindrod Bank accounts into which the social grants are paid,” he said.
Helping the poor
Net1 denies these accusations stating that they are trying to help the poor to enhance their lifestyles through financial inclusion.
“The South African government is continuously striving to reduce poverty and enhance the lifestyle of the poorest of the poor, and we are committed to helping them achieve this through innovation and the security offered by our technology,” said Dr. Serge Belamant, chairman and CEO of Net1.
Net1 further denied that its subsidiary, CPS had made unlawful, deductions on the bank accounts of SASSA grant recipients.
“CPS remains committed to assist the government in eradicating any illegal or unauthorised deductions that are made by third parties on beneficiaries’ bank accounts and confirms that none of the financial services provided by the Net1 group contravenes any South African laws or regulations,” said Net1.