BREAKING: PPRA reviews debit order ban after industry outcry

• PPRA is reviewing its debit order ban after widespread concern from managing agents across South Africa.
• Segregated trust accounts may be excluded from the prohibition following urgent industry engagement.
• Revised guidance is expected in early August, bringing much-needed clarity to the community scheme sector.

Managing agents receive welcome relief as regulator moves to clarify trust account rules

‍South Africa's Property Practitioners Regulatory Authority (PPRA) has moved swiftly to review its controversial directive prohibiting debit orders, stop orders and overdrafts on trust accounts after widespread concern from managing agents, legal practitioners and the community scheme industry.

The regulator is now reconsidering how the directive applies to segregated trust accounts, with revised guidance expected in early August 2026. The development follows urgent engagement between the PPRA and Van Deventer Dowlath & Marx Incorporated (VDM), after the specialist property law firm identified potentially serious unintended consequences arising from the original communication.

According to Denise Geel, Director of Community Scheme Law and Compliance at VDM, the issue was escalated to the PPRA within hours of the notice being issued.

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"Managing agents were suddenly being told they could no longer process essential debit order payments, not because of any misconduct or regulatory breach, but because the wording of the directive did not distinguish between different types of trust accounts," says Geel.

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The PPRA has since acknowledged the concerns and confirmed that it is reviewing the position.

Background‍

The original PPRA communication prohibited the use of debit orders, stop orders and overdraft facilities on trust accounts held by property practitioners.

While the directive was intended to strengthen the protection of trust funds, the wording immediately raised alarm among managing agents responsible for administering community schemes.

Unlike estate agency trust accounts, many managing agents administer thousands of recurring payments every month through segregated trust accounts, where each body corporate or homeowners' association maintains its own separately administered trust account.

The concern was that a strict interpretation of the directive would effectively prevent routine operational payments essential for running community schemes.

Bucket accounts vs Segregated trust accounts

A key issue lies in understanding the difference between the two trust account structures.

• Bucket Trust Accounts
   These are pooled trust accounts where funds belonging to multiple clients are held together in a single account.

Because money from different clients is combined, regulators understandably impose stricter controls to safeguard trust funds. 

• Segregated Trust Accounts
   Managing agents typically operate individual trust accounts for each body corporate or homeowners' association.

Each scheme's funds remain completely separate and are independently reconciled and accounted for.

These accounts are widely used throughout the community scheme sector to process monthly levy collections, municipal accounts, insurance premiums, security contracts, maintenance payments and other essential operational expenses. It is this distinction that lies at the heart of the current review.

The centre of the problem‍

According to VDM, the original directive did not adequately differentiate between pooled trust accounts and segregated trust accounts.

As a result, many managing agents interpreted the notice as applying equally to both structures. This created immediate uncertainty across the industry, with managing agents questioning whether they could continue collecting levies through debit orders or processing regular supplier payments.

Without clarification, routine financial administration across thousands of community schemes risked significant disruption.

Immediate consequences

‍Had the directive remained unchanged, the consequences could have been considerable. Managing agents warned that they may have been forced to:

• Suspend debit order collections for levy payments.
• Change long-established banking arrangements.
• Introduce manual payment processes.
• Increase administrative costs.
• Delay supplier payments.
• Create uncertainty for trustees, owners and service providers.

For many schemes, the disruption could have affected cash flow, budgeting and day-to-day financial management.

PPRA goes back to the drawing board‍

Following discussions with VDM, the PPRA has agreed to reassess the wording of its communication and its application to segregated trust accounts.

‍The regulator is now working with industry stakeholders to ensure that the intention of protecting trust monies is achieved without unintentionally disrupting the administration of community schemes.

A revised communication is expected during the first week of August. The move has been welcomed by the industry as a positive example of constructive engagement between regulators and practitioners.

Meeting in the middle‍

Rather than becoming a dispute between the regulator and the industry, the matter has evolved into a collaborative effort to find a practical solution.

The PPRA remains committed to strengthening governance and protecting trust funds, while industry representatives have emphasised the importance of preserving the operational systems that enable managing agents to administer community schemes efficiently and responsibly.

Both parties now appear aligned in seeking regulatory clarity that protects consumers without creating unnecessary operational risk.

Geel says the willingness shown by the PPRA to engage with industry concerns demonstrates the importance of ongoing dialogue between regulators and practitioners.

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"The objective has never been to challenge stronger regulation. Our focus has always been on ensuring that regulation reflects the practical realities of community scheme management while continuing to protect trust funds," she says.

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The bottom line decision‍

The PPRA's decision to revisit its directive is a welcome development for South Africa's community scheme sector. With thousands of managing agents responsible for administering billions of rand in trust funds on behalf of bodies corporate and homeowners' associations, regulatory certainty is essential.

The expected clarification should provide reassurance that appropriate consumer protections can coexist with the efficient operation of segregated trust accounts.

For now, the industry will be watching closely for the PPRA's revised communication in early August, a decision that will have significant implications for managing agents, trustees, service providers and the millions of South Africans who live in community schemes.

REI will continue to monitor developments and publish the PPRA's updated guidance as soon as it is released.

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