LETTER: Ruling on arbitrary transfer of funds welcomed
Banks must get the green light from consumers before paying debts from their accounts
The high court in Johannesburg has ruled — in favour of the National Credit Regulator (NCR) against Standard Bank — that the common law set-off (https://www.businesslive.co.za/investing/money/2019-07-02-landmark-ruling-stops-banks-from-raiding-your-accounts/) does not apply to credit agreements subject to the National Credit Act. This follows an application for a declaratory order brought by the NCR against Standard Bank seeking legal clarity on the matter.
The NCR had sought an order from the high court that the common law set-off has been superseded by section 124 of the National Credit Act. The common law set-off is applied when two persons owe each other and the debts are extinguished by setting them off against each other. The banks apply this by transferring funds deposited into a consumer’s accounts to settle debts on credit agreements without the consumer’s authorisation...
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