jali commission turns its eye to banking fees
18 June 2007

The Jali commission, appointed to investigate competition in banking, resumes its public hearings today and is expected to focus on the most controversial and sensitive aspects of banking, namely the fees and penalties banks charge.

The four-member panel appointed by the competition commissioner last August - Thabani Jali, Oupa Bodibe, Hixonia Nyasulu and Rob Petersen - is attempting to establish whether the current range of fees and penalties levied by the banks reflects the outcome of a competitive market or one where the banks have market power.

Essentially the commission's heroic task is to try to make sense of the monthly statements bank customers receive.

The tantalising prospect out by the commission is that in the not-too-distant future, when you receive a statement from your bank, you will be able to say: "Oh my, there's another squillion rands gone on bank charges again, but that's alright because now I understand why I have to pay so much money to withdraw funds from my account.

"It's because our very efficient and competitive banks have high, unavoidable costs to cover."

Alternatively the outcome of the commission's investigation might find you seething even more as you contemplate your bank charges.

In the past, the banks have argued that it is nearly impossible to provide straightforward data on charges, because they each offer such a varied array of products and the charges vary according to the product package.

They argue that while trying to compare the various South African banks is almost impossible because of the "incomparability" of their products, attempts to make international comparisons are entirely futile.  In the banks' defence, it needs to be pointed out that not only are they generally very efficient and able to offer a world-class service, but part of their cost structure and the opaque manner in which they tend to operate reflects a somewhat old-fashioned obsession with banking regulations on the part of the authorities.

If the other banks did not also cut their Saswitch fees, then the initiating bank would lose ATM volumes and be considerably worse off commercially.

On the issue of regulations, one leading banker noted: "The focus has traditionally been on risk and ensuring that banks do not fail. It is only in the last few years that there has been a shift towards ensuring that banks compete effectively."  By unraveling much of the complexity, the commission's investigation, although unavoidably dense at times, is well on the way to defining some sort of solution to the gripes of bank customers without threatening the integrity of the system.

Ann Crotty, www.busrep.co.za