Bobby Godsell calls for a ban on garnishee orders
Currently chairman of Business Leadership SA Godsell has called for a national debate on garnishee orders.
“I would have said, sorry Capitec, or whoever, I am not your debt collector – you granted that debt, go and collect it yourself,” he was quoted as saying by the Afrikaans daily newspaper Beeld.
Fred Steffers, newly appointed chairman of Centurion-based PS & S, one of the country’s largest payment systems companies, said there was a growing howl of indignation from consumers who were having their salaries docked by forged and fraudulent garnishee orders.
“We know from widespread media coverage that a considerable percentage of these orders are outright forgeries manufactured by creditors complete with fake authentication stamps. Many more are procured from corrupt court officials who produce completely ‘valid’ garnishee orders even though there had been no formal court order issued.”
A garnishee order is a court order requiring employers to deduct money owed from salaries on behalf of a creditor before the salaries are paid.
Steffers said a much fairer system would be for the employer and the employee to enter into a discussion with creditors to establish what amount the employee was able to pay every month and to then have the money deducted by debit order through a payment systems company like PS&S.
“Using the PS & S product, SmartCollect, which directly connects consumers to the major banks via the PS & S computer network, we are able, with the necessary consent of the consumer, to directly debit client accounts and forward payments to creditors,” Steffers said.
One of the biggest problems is that many consumers who spent freely when times were good and they had well-paying jobs are now unemployed. With unemployment close to 25% there is little hope for many of them of finding jobs that will enable them to pay off their debt.
“We know from media reports that high debt levels among mineworkers could have played a major role in unrest at Lonmin’s platinum mining operations at Marikana near Rustenburg in North West last year, which ended in the deaths of 44 people,” Steffers said.
Walter Volker Chief Executive of the Payments Systems Association of South Africa said a viable alternative to garnishee orders would be what is termed “early debit orders.”
“The type of debit order is paid out to creditors immediately after salaries are paid into the accounts of employees thus ensuring that there is sufficient money in the account to cover the outstanding amounts owed to creditors.”
Steffers said the debit order industry played a significant role in smoothing financial transactions making it easy for consumers to buy goods and services by telephone.
It was also a significant player in the overall economy contributing billions of rand to the gross domestic product of the country (GDP), Steffers said.-Sapa