Banks slam report on fees

Johannesburg - On Sunday banks denounced findings in a survey showing that banking costs had been sharply hiked.

"The survey does not use fair standards of comparison," reckons Bryan McLachlan, head of transactional products at Nedbank. "It would be unusual for a client to pay so much."

The investigation into banking costs was conducted by Horwath Forensics for Finweek, a sister publication of Sake24.

According to the survey, Absa is the most expensive bank in South Africa. This year the bank increased its pay-per-transaction fee by 18% and its average package option by 8%. Package options were up by 21%, 10% and 15% at FNB, Standard Bank and Nedbank respectively.

Keith McIvor, general manager of products and pricing at Absa, says Absa has several problems with the investigation. "It is not at all typical of our average client."

As an example, he mentions that cheques are used as a criterion - while they are outdated. And no distinction is drawn between internal and external debit orders.

"Every year we send a letter to Horwath stating that we don't agree. It remains unanswered. This is a war you cannot win."

He points out that the rise in non-interest income stated in the latest interim report was the result of volume growth and not price increases.

McLachlan claims that the profile of an average bank client that was used was unrealistic. "Clients will use fewer of those services investigated." In Nedbank's case it would be one in ten.

The investigation reflects an average client with a main current account, a second current account, a garage card, a credit card and a home loan. It's based on a family income of R500 000 a year and includes payments for school fees, cash withdrawals, debit orders and internet transfers by the bank.

The investigation indicated that all the banks, with the possible exception of Nedbank, had increased their banking costs considerably above the average inflation rate. In August last year inflation had reached a high of 13.6%. By December it was down to 10.3%, and 8.4% in April.

McLachlan points out that clients need to be charged higher banking fees because costs across a broad range of banks' activities also rise during the year. These can include higher personnel costs or higher transport costs because of crime.

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