Fin24

Govt fund bleeds on bank charges

2012-08-14 18:39

Parliament - Bank charges on the billions of rands that pass through the justice department's Third Party Fund (TPF) are greater than the interest earned, MPs heard on Tuesday.

The fund, also known as Monies in Trust, is the vehicle used by the government to manage the collection and payment of child maintenance, as well as bail, court payments and fines, among other things.

Briefing Parliament's standing committee on public accounts, justice department acting chief financial officer Johan Johnson said the latest financial statements had made them realise just how much the banks were charging.

"(It) is the first time we've had a view (of this); we never knew how much we're paying for bank charges... We're heading into losses now because the bank charges are more than the interest," he told members.

It is understood the fund paid more than R27m in bank charges last year.

Speaking to reporters later on Tuesday, justice department director-general Nonkuleko Sindane said bank fees were "over the top".

According to a document tabled at the briefing, the TPF took in R2.87bn in 2010/11. Over the same period, it paid out R2.88bn. This involved 5.9 million receipt and 5.8 million payment transactions, done through 496 accounts at four major banks.

"On average, 250 000 maintenance payments to beneficiaries (are made) per month," it states.

The 496 accounts are held with Absa (130), FNB (187), Nedbank (five) and Standard Bank (174).

The document shows that during 2010/11, Absa paid out R12.3m in interest on the TPF monies that passed through the fund's 130 accounts with that institution. Over the same period, the bank charged R12.4m in interest on these transactions.

Standard Bank charged R6.9m on 174 accounts, and paid out R6.3m in interest.

Nedbank, where the TPF has only five accounts, charged R198 000 and paid out R113 000 in interest.

FNB was the only one of the four institutions where the interest paid (R8.5m) exceeded the banking charges (R8.1m).

Sindane said the TPF's use of the so-called "Big Four" banks was an historical legacy.

The department planned to start negotiations with them on "how much they are charging us and how much interest they are paying us.

"Indeed, the charges are over the top. Our view is that with that (amount) of investment and saving, we should be able to get a decent (interest) rate.

"Going forward, there are new entrants into the market that we might want to look at... The (existing banks) have served us very, very well, and we want to strengthen our relationship with them. But where there are other deals and possibilities, certainly... we will look at that."

Referring to the 496 bank accounts, Sindane said the department was trying to reduce this number.

"The administrative cost of those bank accounts is really a nightmare for us as a department."

Sindane said the TPF would achieve an unqualified audit for this financial year (2012/13), following the "historical clean-up" the department was now conducting.

"The end result for us is that this financial year... we are going to have an unqualified audit," she vowed.

The clean-up process would also see the department crack down "hard and strong" on cases of deliberate neglect, dereliction of duty, and theft or fraud.

Sindane made a call for more maintenance recipients to open bank accounts so they could receive their payments faster, through EFTs (electronic financial transactions). This would reduce cash transactions.

Johnson said the department was paying maintenance money directly into 217 000 bank accounts each month, out of a total of about 250 000 recipients.

"It would really assist us (to prevent) possible fraud and corruption if we could do this for more people," he said.

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Comments
  • nicola.killops - 2012-08-14 19:14

    Welcome to most of our lives!

      lacrimose.wolf - 2012-08-14 19:43

      Now it affects their bottom line, they might just actually do something.

      daniel.jacobs.3766 - 2012-08-14 20:01

      Now let's see what they come up with to curb the greed of unethical SA bankers.

  • javed.chogle - 2012-08-14 19:26

    I hope something is finally done about the most expensive bank charges in the world .

      abrie.jurgens - 2012-08-15 08:35

      Biggest class action in Australian history; against high bank charges: http://www.financialredress.com.au/ Something similar in SA: http://www.newera.org.za/class-action-lawsuit-against-the-banks/

  • kolobe.mzansi.9 - 2012-08-14 19:26

    bank and health care charges are ridiculous in this country

  • angela.monaghansandells - 2012-08-14 19:27

    So is everyone else. We get charged the earth for taking our own money out of the bank.

  • johnnie.vercuil - 2012-08-14 19:33

    It is not the bank charges that is so high, as the Reserve Bank interest that is so low.

      robqb - 2012-08-14 20:18

      @johnnie.vercuil. At which bank are you an employee/shareholder???

  • andre.vandeventer.16 - 2012-08-14 19:34

    What is news? When You And I deposit money into the bank, in other words lending money to the bank, we have to pay the bank a fee. This has been going on for years! What other deal do you know about where you have to pay your debtor a fee to lend him money!

  • alan.smart.102 - 2012-08-14 19:36

    Feel our pain.....

  • Theo Ferreira - 2012-08-14 19:38

    It is laughable that this amount of annual money in and out is managed by the major banks in the same way as normal current accounts. The obvious solution is to create a centrally managed fund that can be invested at a better rate and pays out similar to a pension scheme. The current setup is ridiculous.

      sibusiso.manqele.9 - 2012-08-14 20:04

      It sounds very stupid really,\r\nwould a company in the private sector pay people from a normal current account..?

  • CHRISTOS52 - 2012-08-14 19:40

    The banks they over charge customers in South Africa

  • debohranel - 2012-08-14 19:40

    Oh gee and they only just realized this......I wonder where they live it can't be in SA with the rest of us .....

  • aristar.aristary - 2012-08-14 19:50

    So now maybe the government will extract its digit and force the banks to stop charging exorbitant bank fees. Personally, I like people to pay me cash!

  • yar.wellnofine - 2012-08-14 19:52

    496 bank accounts???? Whose idea was that. Must be a control nightmare. Impossible to control. Mus leak cash like a sieve.

  • cecil.wright.142 - 2012-08-14 19:57

    The banks are doing nothing more to government than the government does to the public.

      denise.herbst.5 - 2012-08-15 07:35

      I thought the government based it's model for sucking the public dry on the "Big five" :)

  • djmain1 - 2012-08-14 19:57

    Bankers are the scam artists of our time. A destitute person gets thrown in jail for stealing a loaf of bread and yet, these bankers flout the law and fraudulenting suck billions out of us but never face any consequences. Time for some of them to be locked away - that MIGHT stop this scourge. I sense a reckoning coming.

  • sibusiso.manqele.9 - 2012-08-14 19:58

    Feel our pain...\r\noh, silly me, my taxes end up there too...

  • robqb - 2012-08-14 20:14

    OH! So now, because it affects their balance as well, they wake up and smell the coffee.

  • mark.a.fysh - 2012-08-14 21:55

    The banks have been doing this for years. I had a small savings account with Nedbank and they sucked it dry in a year. My fault - I was morbidly curious.

      mark.a.fysh - 2012-08-14 21:56

      Note: it was a SAVINGS account!

  • rashied.bux - 2012-08-15 03:53

    concentrate on theft and leave the bank charges, i promise you thats where your greatest loss is

  • Vince.York - 2012-08-15 06:20

    Banks have furthermore stripped owners of their asset ownership, and given them falsely created expensive 'bubble' bond money on the "never never" system instead....... Banks & most financial institutions never suffered a cent loss before, during or after the devastation of apartheid sacrificial times and have simply forwarded it onto the stock exchange bourses and thenceforth further onto uncertain derivatives & futures which in turn are supported by some fictitous rating agency who allows certain insurance companies to get rich promising to pay when the world now experiences that they never could pay. THIS is the end result of our "brilliantly bright young connected graduates" seeing a shortcut to riches compared to the very real Sharia Financial laws where the above cannot be allowed to happen -but does that make it right & the only way?

  • braam.zietsman - 2012-08-15 06:40

    No surprise really, FNB is the only bank not ripping everyone off..

  • john.markham.737 - 2012-08-15 07:48

    Do something about it? They have tried. They are not intelligent enough to proof that the banks are steeling our money. They know they are doing it but the cant proof it.

  • lildave101 - 2012-08-15 09:46

    Well welcome to the real world.. We are all getting screwed!!

  • charles.kubhayi.9 - 2012-08-15 10:02

    The good thing that the department must do is to set a commission that will investigate any fraudulent activity by the banks.I seems like the banks have taken advantage that the department does not check their financial statement and therefore decided to make money for themselves.

  • mark.haupt.31 - 2012-08-15 12:26

    Just shows how well insulated this lot have become from real life. Don't they think we pay interest, bank charges etc? Do they have any idea how ordinary people in SA live? Do they actually care?

  • gregg.sneddon - 2012-08-15 12:59

    This is tragic! How can a fund that has R2.8bn passing through it only earn R27m interest? Even if it is only R1bn on ave for the 12 month period it should have got at least R50m interest. Heads should roll...and as for the fees...time to consolidate the accounts and put pressure on the banks to come to the party!

  • riotousr - 2012-08-15 14:06

    I told you so. You should see how much I am spending at Nedbank.

  • richard.zanner - 2012-08-15 14:19

    I agree this is not right. The more the banks take the less the Government can steal.

  • rubusx - 2012-08-15 15:26

    All four major bank have been taken to court about there fees and other profiteering: see w w w . n e w e r a . o r g . z a !

  • scott.cundill - 2012-08-15 15:31

    The banks are being sued for this reason - www.thebigcase.co.za.

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