Cape Town - Fees for many products in the financial sector remain too high, Finance Minister Pravin Gordhan
said on Wednesday.
"High costs in savings products undermine the national objective of getting our people to save more," he said in his 2012/13 budget speech in the National Assembly.
The financial industry should take more urgent steps to reduce costs and introduce more appropriate and transparent saving and investment products, including annuities.
There was also much to be done to improve market conduct practices in the financial sector.
The "treating customers fairly" initiative would be accelerated to protect customers more vigorously.
"Our financial institutions should also recognise the important role of women in our economy. This progress needs to be more transparently reported," he said.
But the sector defended its fees.
Certain conditions peculiar to South Africa contributed to high banking fees, the Banking Association of SA said in response to Gordhan's criticism.
"We note the minister's comments on the financial sector," the association said in a statement.
"However, we must point out certain cost factors peculiar to South Africa that contribute to such costs. Examples are broadband costs, costs of protecting cash and significant compliance costs."
The association said increasing competition was leading to a more efficient sector with lower costs.Progress made
However, Gordhan said progress was being made on several financial sector reforms.
Among others, there was now agreement between stakeholders on enhanced targets for empowerment financing and access to financial services.
More appropriate and balanced capital adequacy and liquidity standards were being phased in for banks, and similar reforms were planned for the insurance sector.
Proposals would be published for simplifying and modernising procedures for cross-border investments in and out of South Africa.
"After taking public comments, Treasury recognises that some of the barriers identified also apply to domestic investors; we intend to consult further to explore how we can lower costs and barriers to all investment in South Africa," he said.
A series of discussion papers would be released this year on promoting household savings and reforming the retirement industry.
Consultation with the industry, employers and trade unions would take place on these reforms.
Among the issues were improved governance over pension funds, including more effective interventions to eliminate corruption and fraud; and ways to improve preservation of retirement fund assets to ensure higher income levels in retirement, Gordhan said.