CAN A BANK TRANSFER FUNDS FROM ONE ACCOUNT TO ANOTHER WITHOUT YOUR PERMISSION?

The principle of “Set off” is a well known common practice where a debt can be extinguished or reduced by the credit of some person. Consequently, this means that the debt between the parties could completely be settled, if the parties are equally indebted to each other. The rule of set off can only be applied where it is not prohibited by legislation.

Section 90(2)(n) of the National Credit Act(NCA) provides that any provision in a credit agreement concluded in terms of the National Credit Act and which purports to automatically allow set-off is unforceable and unlawful.

The set-off may only be authorised in terms of Section 124 of the NCA which provides that the consumer expressly makes arrangements after confirming the account from which the funds may be withdrawn, the amount to be transferred, the debt to which is to be allocated and the date on which it is to be transferred.

Last but not least, the NCA imposes strict compliance regulations to the Credit Providers in that they should notify consumers of any set-off that is to be made prior to cancellation thereof. This also applies to the banks in that they should first get permission from the consumer and cannot of one’s own accord transfer funds to satisfy debts.

For further legal advice on your legal rights as consumers, please do not hesitate to contact Duvenage Attorneys.