Bank fees reform

Banks have been getting away with charging high fees. It has benefited shareholders to the detriment of consumers. But new reforms are coming soon that will force banks to change their market conduct

In May last year, finance minister Pravin Gordhan summoned the CEOs of the Big Four banks — Standard Bank, Absa, First National Bank and Nedbank — to his office. The bank bosses knew what they were in for. Their market conduct in retail was in question: bank charges were high and there was a lack of transparency around them . Gordhan wanted to rein in these charges.

In 2004 treasury and the Reserve Bank commissioned work into the competitiveness of banks in SA. That led to a banking inquiry by the competition commission in 2006, headed by advocate Thabani Jali, and the banks were forced to divulge the extent of their market dominance and practices.

Changes loom for the banks

Finance Minister Pravin Gordhan has promised significant changes in the way banks deal with customers after a meeting banking heads.

The talks would lead to lower costs for consumers and increased competition.

He said: “The banking sector has done well during the financial crisis as we’ve had an excellent regulatory system compared to those countries that were worst affected.”

He said despite the recent Greek debt crisis threatening financial institutions, South Africa was “fairly sound”, but that the finance ministry would be watching developments.

He said in light of this, it was time that competition and pricing in the banking industry be addressed.