Johannesburg - The Competition Commission has admitted that it was "less powerful" against South Africa's largest banks.

"The inquiry into bank charges made recommendations and (we) hope the banks will change their behaviour," the commission's divisional manager for policy and research, Simon Roberts, told Fin24.com.

He was referring to the results of the technical inquiry into bank charges, headed by high court judge Thabani Jali. The 22-month investigation culminated in 101 public hearings with banks in June 2008.

Roberts says the commission made recommendations for pricing reform, the lowering of bank charges and increasing competition among the country's banks to the National Treasury and the SA Reserve Bank, the banking industry's regulators.

Asked if "hoping for a change of behaviour" was the best possible outcome for the probe, Roberts said the enquiry was not an investigation into cartel activity with the purpose of punishing possible offenders.

The enquiry was instead an attempt to establish what could be done to make banking affordable and ease the barriers to entry.

The commission could not enforce the recommendations, particularly the lowering of charges on the inter-bank transfer system, as the industry was sceptical about the possible entry of new "unstable" players which could "contaminate" the country's financial system.

The commission has used the strong-arm tactics in the past to bring down cartels in the bread and pharmaceutical sectors, forcing Tiger Brands and Adcock Ingram to pay admission-of-guilt fines. But Roberts indicated that it would not work with the banks.

"We did not investigate cartel activity, and we have to be realistic about our powers in an industry as technical and strategic as that," said Roberts. "It's also fair to admit we were less powerful in the banking enquiry than we were with the bread cartel."

However, Roberts claimed some success for the commission, saying the public now knows what the banks are doing.

"Absa has capped the fees it charges for unpaid items," said Roberts. In October, Absa said it would charge its "entry-level" clients R5 for unpaid items, instead of the traditional R105.

That was one of the 28 panel recommendations covering the areas of penalty fees, ATM fees, access to the national payment system, payment cards and interchange fees.

- Fin24.com