Monday, 24 April 2006
The National Payment System and Competition in the Banking Sector.
The SACP commends the Competition Commission on its decision to hold a public enquiry into bank charges and access to the national payment system. We hope the enquiry will lead to a formal investigation by the Commission into the payment system and competition in the banking sector and ultimately to changes in policy, legislation and regulation that will improve access to appropriate and affordable banking for all South Africans.
These developments are a further vindication of our campaign to make banks serve the people. Since the launch of our campaign we have always said that South African banks are fleecing customers through their bank charges which are amongst the highest in the world.
The findings of the Commission?s research into the national payment system indicate that all banks are making massive profits out of high bank charges. This exploitative practice affects the workers and the poor most and undermines any efforts banks are making to improve access to financial services by the estimated 13 million South Africans who are unbanked.
Based on public information, the Commission?s initial research findings show there is no apparent link between operating costs and charges. One example in the report is that out of bank charges of R4, 83, the operating costs to the bank were a mere 55 cents. Banks reportedly refused to disclose how they calculate these high charges, or how the charges relate to their operating costs. The only conclusion we can draw from their refusal to disclose how charges are calculated is that they are completely exploitative and that over 90% of charges is pure profit.
The SACP fully supports the intention of the enquiry to bring transparency to how banks calculate their charges and to establish what portion of the R29 billion a year banks earn from fees related to the payment system is profit. The ownership and control of the national payment system by the banks must be examined to determine whether the system is fair and competitive.
The SACP will submit evidence of high bank charges to the Commission enquiry and will provide testimonies from our members about the impoverishing effects these charges have on poor people, workers and communities throughout the country. We will testify how exploitative charges hamper access. We will also make submissions on how the banks? ownership and control of the national payments system prevents access by alternative financial institutions such as community or worker savings and credit co-operatives.
We urge the banks to accept the Commission?s invitation to provide full information on how they calculate charges and not to hide behind the excuse that this information is market sensitive. The public has a right to know how charges are calculated and to demand that prices are fair and transparent.
Blade Nzimande
General Secretary
Contact:
Malesela Maleka
SACP Spokesperson
Tel: 011 339 3621
Fax: 011 339 4244
Mobile: 082 226 1802
Email: malesela@sacp.org.za