Ban on banks transferring your money to clear accounts 'in the red'
142 days ago
Banks will no longer be able to take money from their client's accounts to settle outstanding debts without first getting permission thanks to a ruling handed down by the High Court.
It's been a controversial practice of the banks for many years now.Wendy Knowler, Consumer journalist
The common-law 'set-off' practice allowed banks to take money from accounts with a positive balance to pay off those which were 'in the red'.
It would often leave them in dire straits for the rest of the month, not being able to meet their debit orders or buy food for that month.Wendy Knowler, Consumer journalist
The ruling means that banks will now have to obtain permission from consumers before transferring funds to pay outstanding debts.
The banking code didn't require banks to issue a warning, obviously, they felt if someone was warned they'd just whip all of their money out and make sure the bank couldn't get their hands on it.Wendy Knowler, Consumer journalist
The ruling came after the National Credit Regulator (NCR) brought a case against Standard Bank wanting clarification that the common law practice didn't apply to credit agreements.
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This article first appeared on CapeTalk : Ban on banks transferring your money to clear accounts 'in the red'