A Banking Enquiry was conducted from August 2006 to June 2008 to examine bank charges and access to retail banking in South Africa. According to the Competition Commission, bank charges are unnecessarily high and they are higher than they would be at competitive levels.

An article in the Cape Times states that the four major banks (Absa, Standard Bank, FNB and Nedbank) have used complex fee structures to abuse their market power. These four banks control more than 90% of the retail market for personal transaction accounts (PTAs). In 2006 transaction fees represented one third of the banks’ income, altogether R34, 5 billion excluding interest or corporate and business banking.

The Banking Enquiry held 21 days of public hearings, received 267 submissions from individuals and 151 submissions from stakeholders during the period of the investigation. They have made 28 recommendations aimed at addressing concerns raised by consumers, small and prospective banks and non-bank stakeholders. The recommendations cover penalty fees; ATM fees; access to the national payment system; payment cards; interchange fees; and products and pricing. Click here for a summary of the key points.

The panel’s recommendations will be sent to the Department of Trade and Industry, the National Treasury and the South African Reserve Bank, so that laws can be changed to implement the proposals. A City Press article quotes Paul Beadle, justmoney managing director, who welcomed the report but warned that it will only make a difference if the Competition Commission and banks work together to make these much needed changes a reality: “The Banking Enquiry Panel lays the blame for this at the door of the banks, so the banks must act and make improvements voluntarily before the government steps in with legislation and red tape”. The Banking Association of South Africa managing director, Cas Coovadia says that “The Banking Association is committed to engage the Competition Commission, relevant authorities and its own members to explore how best to progress those recommendations”.