Reduce banking fees - Gordhan

Tuesday, June 1, 2010

Pretoria - Finance Minister Pravin Gordhan agrees that there is a need for the reduction of some banking fees.

"What we are saying is that fees charged for debit orders must be lower than what they are for all customers, whether they're high income earners or low income earners," Gordhan told media on Tuesday.

The minister's comments follow a meeting between the ministry and the banking sector chief executive officers held to discuss the responses of the retail banks to recommendations made by the Banking Enquiry Panel that was appointed by the Competition Commission.

The commission launched an enquiry into the retail banking and national payment system in the country in 2006. This led to a total of 28 recommendations being made. On Tuesday, Treasury said that 19 of the recommendations had been agreed to.

The lowering of penalty fees on dishonoured debit orders, greater transparency of ATM fees and charges as well as improved customer education were among some of the recommendations agreed to.

"Many of them had noted they had been charging relatively high fees. Most had indicated that they had lowered (the fees) quite significantly for their low income accounts. Some still have what they consider high income accounts but it is clear that we feel that across all categories the fees need to come down," said Ismail Momoniat, deputy director general for tax and financial sector policy.

Treasury said the recommendations were aimed at improving the quality of banking services to customers as well as improving the retail banking environment as well as transparency.

The minister described the talks between the banking sectors as "an important milestone".

"The theme running through all of these recommendations is transparency. There must be transparency of all of the charges, they must be writen in an understandable language and communicated in way that people can compared A, B and C and then linked with this is the ability by consumers to make choices," explained Gordhan.

Regarding other outstanding recommendations, Treasury said discussions were to continue.

The minister also added that there was a need for more active consumer groups who would put pressure on banks to lower their fees.