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Thread: Competition commission's banking inquiry public hearings.

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    Site Caretaker Dave A's Avatar
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    Competition commission's banking inquiry public hearings.

    Nedbank's Rob Shuter was the first representative of the big 4 banks to testify at the competition commission's banking inquiry public hearings.

    While banking in South Africa is competitive there is a need to bring down bank costs, Nedbank's retail managing director Rob Shuter said on Thursday.

    "I believe competition is feared in the banking industry and it's growing with increased competition," Shuter said.
    Of course they're nervous. No-one enjoys posting lower year-on-year profits. And with performance margins better than pretty well anywhere else in the world, surely serious competition must come one day and end the easy run.

    Unsurprisingly, COSATU still believes in the free lunch:

    In direct contrast to Shuter's submissions, Jan Mahlangu of the Congress of South African Trade Unions (Cosatu) said bank charges and costs were still too high.

    He argued there should be a direct link between bank charges and the cost of the service provided, and that some banking accounts should be free of charge.
    After making a fairly sensible statement that bank charges should be related to the cost of provision, why Jan would argue against his own postition by calling for free-of-charge accounts is beyond my limited understanding.
    extracts from M&G here
    The trouble with opportunity is it normally comes dressed up as work.

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    Site Caretaker Dave A's Avatar
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    Seems the inquiry is having an indirect effect already. FNB and Nedbank have both come out saying the SAsWITCH fee should be dropped. This means we could use other banks' ATMs without financial penalty.

    One of my lost posts had a link to testimony that the current fee structure discouraged saving. It was an interesting point. Basically, if you left money in a savings account you could easily come back in a year's time and find the balance significantly lower.

    The time it takes to see these inquiries through is a little disturbing. I see the final report is only expected in July 2007!!
    The trouble with opportunity is it normally comes dressed up as work.

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    just me duncan drennan's Avatar
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    Looking at what has been said and who is saying it, it seems that the big 4 are being realistic and taking a proactive approach. Hopefully by the time the report is finished there will have been significant improvements.
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    just me duncan drennan's Avatar
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    Here are some comments from FNB, available on MoneyWeb

    Speaking before the Competition Commission inquiry into bank charges and the National Payments System, FNB CEO Michael Jordaan said the banks could not abolish the fees on their own because under competition law they are not allowed to discuss or set pricing.
    __________________

    Jordaan also told the commission that the bank would love to give customers the ability to compare its offerings to other banks but unfortunately it was unable to do so because of stringent rules around competitive advertising.
    and with regards to the NCA I found this interesting,

    “The National Credit Act (NCA) only comes into effect next year and it is a piece of legislation specifically designed to regulate fees and margins,” Jordaan told journalists after the hearing, adding “The act is expected to shave about R788m off the group’s annual profits.”
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    Site Caretaker Dave A's Avatar
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    I'm a little more cynical.

    I think they're trying to reduce the severity of the raping of the consumer to deflect the possibility of an over reaction from regulators.

    Banks have been steadily adding a plethora of new charges over a long period of time. This in an era when IT progress, theoretically, should have reduced handling and administrative costs.

    And the evidence is in their financial statements.
    The trouble with opportunity is it normally comes dressed up as work.

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    just me duncan drennan's Avatar
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    Quote Originally Posted by Dave A View Post
    I'm a little more cynical.

    I think they're trying to reduce the severity of the raping of the consumer to deflect the possibility of an over reaction from regulators.
    I think yes and no. The banks will take chances were they can, but I think that in an internet world there is much less loyalty to big brands and people have greater access to facts (okay, given, only a small percentage of south africans actually have internet access).

    Competition is hotting up, and bank charges will be were the war is waged (I think). Let's see what happens...
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    Site Caretaker Dave A's Avatar
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    This first report I had posted last week, but disappeared with the server crash. Great point though.
    Chief executive officer of Gabriel Davel (the National Credit Regulator), testifying at the public hearings of the Competition Commission's Banking Enquiry in Pretoria, said that with the exception of one financial institution the returns on all entry level savings accounts were negative.

    "If people see negative growth on their savings they stop saving. It is the logical thing to do," Davel told the enquiry which is into its third day of hearings.

    He said a study indicated that the negative returns were as much as 19%, if return debit fees were brought into consideration it was as high as 43%.

    "The effect is that people don't save so when there is a crisis they have to borrow money, which brings on debt," Davel explained.
    full story from Fin24 here
    In another story published today, Standard Bank seems to think things are just fine.
    In a submission to the Competition Commission which is conducting an inquiry into bank charges, among other issues in the industry, Standard Bank said that the number of banks and non-banks competing in the South African market were growing and that there was ease of entry and exit for new competitors, offering a range of products, including new and different products.

    It added that research showed that the South African banking industry was competitive when compared with other developing countries and argued that it was of little value to compare South African transactional charges to those levied in other countries.
    full story from Fin24 here
    The trouble with opportunity is it normally comes dressed up as work.

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