Guest post by Advocate Neville Melville.

The Banking Enquiry Panel (‘the Panel’) of the Competition Commission had an unenviable task in conducting its enquiry into competition in retail banking.

The general public expectation was that the panel would produce the ‘smoking gun’ and confirm the urban legend that the CEO’s of the country’s major banks meet in a huddle (at the Rand Club or on a golf course) to set the fees and charges for the industry.

Had the panel adopted the phraseology of Discovery Channel’s “Mythbusters”, it would have had to have declared that particular myth to have been “busted”. The panel was unable to point to particular instances that would constitute abuse that warranted action on the part of the authorities.

What the panel did find however was that bank charges were, on the whole, well above the level that effective competition would allow. The panel attributed this fact to the complexity of products and price, inadequate transparency and disclosure, the cost and difficulty of switching banks and the reluctance of the banks to engage in vigorous price competition with each other.

Any jubilation the banks might have had over being let off the hook for price fixing would have been short lived as the panel found some ATM fees and penalty fees for rejected debit orders too high.

The panel recommended that the fee for dishonoured items should be capped at R5.00 per item, which is a fraction of what some of the banks have been charging. Bank customers should be pleased with this news, particularly after all the recent price and interest rate hikes.

Beyond this, the panel did not recommend any other means of price regulation. Competition should be encouraged through development of a code of minimum standards for the disclosure of product and price information.

The panel envisages a role for the Ombudsman for Banking Services in making contributions with regards to the contents of the code and un-enforcing compliance and monitoring of compliance with the code.

As South Africa’s longest serving Ombudsman and founder of Onlineombud.com, Neville Melville has developed a solid reputation both in South Africa and abroad. Apart from his involvement in dispute resolution, he is also member of the Chartered Institute of Arbitrators and has a long-standing association with various financial ombudsmen and international ombudsman associations. Click here to read more about Neville Melville.