NCR Goes To Court Over “Set Off”
When you first took out a credit agreement with your bank you probably signed all those terms and conditions and never even read them (foolish, but..man, who really has the time?). One of those small T&Cs may have had to do with a practice called “set off”.
This is a practice of using money from one account to pay another account. For example, you owe money on a credit card so the bank takes money from your normal everyday transmission account and puts it into the credit card account.
This has been an industry practice for a really long time but now the National Credit Regulator (NCR) are taking FNB to court to ask the North Gauteng High Court to make a declaratory order on the subject. They want to know if National Credit Act Section 124 has changed whether this is permissible or not.
Consumers under debt review sometimes come face to face with this issue when a credit providers eager computer finds money that is paid into their savings account (say from your salary) and then “steals it” to pay a debt which is under debt review and meant to be paid via the normal debt review payment. This can mean that a consumer is left without any available funds for a few days while the Debt Counsellor, NCR, PDA and credit provider and sometimes even their lawyers fight about it. Fortunately, in most cases, Credit Providers want to make the debt review work and know you need food to eat and to pay rent and refund the money but it takes time and causes stress for everyone.
The NCR feel that a bank should ask permission before doing anything like that and hope that the court will be able to rule on the matter and give clarity on whether credit providers are not allowed to do this or if perhaps they are allowed to do so (but then still might give the money back if you are under debt review)