2 June 2010
South African Finance Minister Pravin Gordhan has called for some banking fees to be reduced, for greater transparency in how banks calculate their fees, as well as for the formation of consumer groups to pressure banks to improve their services.
“What we are saying is that fees charged for debit orders must be lower than what they are for all customers, whether they’re high income earners or low income earners,” Gordhan told journalists in Pretoria on Tuesday.
His comments follow a meeting between the National Treasury and banking sector CEOs held to discuss the responses of the retail banks to recommendations made by the Banking Inquiry Panel that was appointed by the Competition Commission.
Commission of enquiry
The commission launched an inquiry into the retail banking and national payment system in the country in 2006. This led to a total of 28 recommendations being made. On Tuesday, the Treasury said that 19 of the recommendations had been agreed to.
The lowering of penalty fees on dishonoured debit orders, greater transparency of ATM fees and charges, as well as improved customer education were some of the recommendations agreed to.
“Many of them had noted they had been charging relatively high fees. Most had indicated that they had lowered [the fees] quite significantly for their low income accounts,” said Ismail Momoniat, deputy director general for tax and financial sector policy in the Treasury.
“Some still have what they consider high income accounts, but it is clear that we feel that across all categories the fees need to come down.”
Calling for transparency
The Treasury said the recommendations were aimed at improving the quality of banking services to customers as well as improving the retail banking environment as well as transparency.
Gordhan described the talks between the banking sectors as “an important milestone”.
“The theme running through all of these recommendations is transparency. There must be transparency of all of the charges, they must be written in an understandable language and communicated in way that people can compare A, B and C – and then linked with this is the ability by consumers to make choices,” explained Gordhan.
Regarding other outstanding recommendations, the Treasury said discussions were to continue. Gordhan added that there was a need for more active consumer groups who would put pressure on banks to lower their fees.