Court rules against banking practice of 'set-offs'
Banks can no longer take money from their clients' current accounts to settle their credit card debt thanks to a ruling by the Gauteng High Court (Johannesburg) outlawing the common law practice known as ‘set-off’.
This follows an application for a declaratory order brought by the National Credit Regulator (NCR) against Standard Bank seeking legal clarity on whether set-off had been superseded by the National Credit Act's section 124, notes a TimesLIVE report.
The court ruled that that section excludes the operation of the common law set-off in all credit agreements that are regulated by the NCA.
‘The NCR welcomes this judgment as it protects consumers from financial difficulties caused by the arbitrary transfer of funds from their accounts by banks’, says the NCR's CEO, Nomsa Motshegare. ‘Banks should obtain permission from consumers before transferring funds from their accounts to pay amounts due under credit agreements.’
The judgment has also been welcomed by the SA Human Rights Commission (SAHRC).
‘The judgment has provided the much-needed clarity on the position in law and marks the end to a destructive practice wherein set-off is often times applied without any notice to, or interaction with, the consumer,’ said the SAHRC in a statement recorded on the Moneyweb site.
Costs were awarded against Standard Bank.
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