Reneé Bonorchis
14 November 2008
Johannesburg — ABSA, SA's largest retail bank, said this week that despite the deafening silence in the five months since the launch of the executive overview of the Competition Commission's investigation of the banking industry, it had already reduced penalty fees for failed debit orders to the recommended R5.
The abbreviated report was released in June, with a 600-page document to follow shortly thereafter. But there have been unexplained delays. Since the treasury, the trade and industry department , the Reserve Bank and the Competition Commission are all meant to be involved in the implementation of some of the report's recommendations, it is possible these bodies are disagreeing over certain points.
Keith McIvor, head of savings and investments at Absa, said the bank's lawyers had seen the full document and were given an opportunity to "Tippex out" any confidential information.
McIvor said Absa had prepared position papers on all 28 of the recommendations in the banking inquiry report and had shared its thoughts with financial authorities.
According to Absa there were three types of implementations that would follow from the original report. There would be changes Absa could make itself; there were changes that would require co-operation between the banks, such as direct charging for ATMs; and there were changes to be made in the legislative arena that would require government intervention.
"Certain players are not prepared to move until the formation of the committee," McIvor said, "but we want to move."
Absa, apart from reducing penalty fees, had launched two new banking products, CashSend and a prepaid debit card, which McIvor said were in line with the concepts of transparency and simplicity.
In June, the proposed R5 cap on penalty fees for failed debit orders was a nasty surprise for the banks. It was lower than expected and caused banks to go back to the drawing board to figure out how to cope with the slashing of those penalty fees. Some banks had charged as much as R110. First National Bank (FNB) said it was used to charging R30 for certain accounts.
Patrice Rassou, senior portfolio manager at Sanlam Investment Management, said previously there may be a 1%-2% decline in the big banks' earnings as result of the report, but McIvor said yesterday the R5 fee "was not material" for Absa.
What would have an affect, he said, was the proposed direct charging model for ATMs. With direct charges a Nedbank customer, for example, would pay one fee to Standard Bank for the use of Standard Bank's ATM. The "carriage fees" would be dropped, and Nedbank would not receive a fee for one of its customers using the Standard Bank machine.
But McIvor said yesterday banks would then have to decide carefully where to put their own machines and be prepared to pay higher costs if they wanted to put ATMs next to retailers such as Woolworths, for example, rather than in rural areas.
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