Recommendations published on Wednesday in the long-awaited enquiry into bank charges must be implemented to provide customers with better value banking and bring much needed competition to the personal finance sector, according to www.justmoney.co.za, South Africa's online guide to money.
www.justmoney.co.za has urged the Competition Commission and the banking industry to work together to implement the recommendations in the 600 page report from the Banking Enquiry Panel, which include far-reaching changes such as:
- A centralised banking fee calculator
- Customer ‘profiles' to help users compare different products
- Standards for disclosure of bank pricing on product information and statements
- Making ATM charges clearer and more consistent
- A switching code to help consumers move bank accounts easily
- Allowing banks to compare their products with their rivals in advertising
Paul Beadle, managing director of www.justmoney.co.za, welcomed the report but warned: "This report has been two years in the making and contains a lot of commonsense recommendations, but unfortunately the Panel's findings are not binding, so it will only make a difference if the Competition Commission and the banks work together to make these much needed changes a reality.
"What is clear from the report is that the public are unhappy with the bank charges they are paying and the lack of clarity surrounding fees, which makes it difficult to compare products and find better value. The Banking Enquiry Panel lays the blame for this at the door of the banks, so the banks must act and make improvements voluntarily before the Government steps in with legislation and red tape."
In its summary, the Banking Enquiry Panel states: "The complexity of products and prices (combined with inadequate transparency and disclosure), the cost and difficulty for consumers in switching banks, and the reluctance of the major banks to engage in vigorous price competition with each other that could "spoil" the market for them in the long term - all contribute to producing a situation where the prices charged to consumers for transactional accounts and payment services are probably (although with some exceptions) well above the level that effective competition would allow."
Beadle says that it clear from the new round of revised fees being rolled out by Nedbank and FNB on 1st July, as well as the existing tariffs charged by Absa and Standard Bank, that bank charges are still overly complex. He says: "Nedbank and FNB have spoken a lot about how they have kept their price increases to a minimum, but these pricing structures are still impossible for the ordinary customer to understand without help from a comparison site like http://www.justmoney.co.za
"However, there have been encouraging developments, such as FNB's Unlimited Option, which is easy to understand and can offer good value banking to many consumers. Go Banking continues to provide low-cost banking with money saving initiatives such as cheaper cash withdrawals at Point of Sale, whilst Nedbank's use of www.justmoney.co.za to enable their customers and potential customers to compare Nedbank products with accounts from the rest of the big four banks is a step in the right direction."
www.justmoney.co.za broadly welcomes all of the report's 28 recommendations, but highlighted the following as key developments:
- A centralised banking fee calculator - www.justmoney.co.za has been helping consumers compare bank charges since last year, so we understand the demand amongst customers. Any steps to make this more widely available is welcomed
- Customer ‘profiles' to help users compare different products - It's vital that consumers can shop around and compare, and although www.justmoney.co.za questions how profiles would work in practice, this could provide a good benchmark
- Standards for the disclosure of bank pricing on product information and statements - The biggest complaint from consumers to www.justmoney.co.za is that they do not understand their bank charges and wouldn't even notice if they were wrong, so this is a ‘must-have' recommendation
- Making ATM charges clearer and more consistent -The Enquiry Panel was particularly critical of how these charges are levied, so a move to consistency and clarity will help people make informed choices - and save them money!
- A switching code to help consumers move bank accounts easily - When customers do decide to switch to cheaper bank accounts, the process is so complex they often give up. So a switching code, plus the proposed central FICA database, will be great for consumers and good for competition
- Allowing banks to compare their products with their rivals in advertising - This is standard practice in Europe and is vital to help customers compare products more easily, but it will also be a boost to the banks helping them to compete for customers
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