Law firm urges revision of garnishee laws

This follows detailed Moneyweb investigations which have exposed abuse of the system, including an investigation into abuse at the Palm Ridge Magistrates Court. A report complied by Dane Volker, a candidate attorney at Webber Wentzel, and Moray Hathorn, partner and head of pro bono at the firm, notes it has been estimated that as much as 40% of the SA workforce's income is spent on paying debt. 'In an already volatile credit market, there is no quick-fix to the problem of over-indebtedness at a low-income level without prejudicing the rights of responsible credit providers. It may, however, be time for legislators to throw their weight behind tighter regulations for debt collection,' they say, pointing out that while the regulations of the Public Finance Management Act protects 40% of state employees' gross salaries from any deductions resulting from court orders, including garnishees, no such statutory cap exists in respect of ordinary workers. 'There is also no bar on the number of garnishee orders that may be granted against a single consumer. There seems to be little reason why vulnerable consumers cannot be afforded the same protection. Every consumer's right to equality in terms of the Consumer Protection Act supports this contention.' Full article on the Moneyweb site

City of Tshwane employees are facing severe indebtedness, owing to potentially illegal loan repayments being deducted directly off the City's payroll, according to a Moneyweb report. It says Tshwane's payroll administrator, Fihrst, has entered into an arrangement with a preferential micro-lender, Propratt, allowing it to deduct money from the salary of employees before it is paid into their bank accounts. Documents Moneyweb says it has in its possession reveal Propratt is being allowed to deduct amounts directly off Tshwane's payroll via Fihrst's payment system, Pay+. The report says the arrangement effectively secures Propratt's 'unsecured' loans while prioritising its debt repayments over those of other lenders and even the borrower's basic living obligations. The report notes that Fihrst, by allowing the deductions, appears to be in breach of its memorandum of understanding (MOU) signed with Tshwane. 'Micro lender deductions are specifically prohibited in terms of the MOU,' said Umar Banda, executive director of financial services at Tshwane, is quoted as saying. However, Fihrst denies being in breach of the law or of its MOU. 'There are no restrictions contained within the tender specifications, tender response or ensuing contractual agreement that constrains employers or employees of Fihrst from utilising the Pay+ product,' says Thato Chiloane, head of Firhst. Full Moneyweb report