December 29, 2011 · 2 Comments
According to a report on 29 December, two of the so called Big Four South African banks will be looking to increase banking charges in 2012. The report stated that Standard Bank intends to raise private banking fees while personal banking fees would remain flat.
Another bank, Nedbank, in an overly convoluted statement laden with marketing spin, stated that some of their services would remain free while other services would remain unchanged in the coming year.
Both Absa and First National Bank (FNB) have not decided on their banking fees for 2012, with the latter reportedly contemplating a cash back arrangement – what such an arrangement would entail, remains a mystery.
The secrecy and the apparent lack of transparency from the country’s banking establishment are worrying and touch on issues that ought to be debated.
Of course, the longstanding perception in South Africa is that banking fees in the country are exponentially high in comparison to those found in other countries , rightly so. It is considered to be a norm for consumers in countries such as Singapore and Ecuador to enjoy one of the cheapest banking fees in the world, free of the many transaction charges and services fees that are so endemic in South Africa’s banking system.
South African banks, particularly the so called Big Four, who by all accounts represent an Oligopoly (a market dominated by a few large suppliers) and quite regularly display cartel-like characteristics, are perceived to have conspired for years against the South African consumer, raising fees and adopting similar policies almost at will, often to the detriment of the consumer.
In the absence of a proper regulatory framework, particularly before the Consumer Protection Act (CPA) malicious practices of this nature had continued largely unabated. It may be some time before the full capacity of the CPA is realised and properly implemented, and until then, the consumer will continue to be at a disadvantage.
In February 2011, the National Treasury Policy Document noted that the South African financial sector is characterised by high and opaque fees, and, in some cases, the unfair treatment of customers.
For savers, particularly the poor and vulnerable, savings instruments are limited, expensive and inappropriate. For borrowers, particularly small and medium enterprises, access to credit is often difficult.
The Policy Document also went on to state that regular complaints to the relevant ombuds and numerous independent studies demonstrate that fees and charges are a problem. The document also mentioned independent inquiry conducted by Competition Commission which found that bank charges in the country are unreasonably high.
The question then becomes, if the South African government is aware of such practices why hasn’t the government dealt with them? Surely an unwillingness to conclusively deal with such issues is tacit permission for the banks to stay the course.
**Political Analysis South Africa was unable to get a response from the National Treasury at the time of publication.
- Political Analysis South Africa