MEDIA STATEMENT BY THE
INKATHA FREEDOM PARTY

 


IFP WELCOMES PROBE INTO BANK CHARGES

June 6, 2005

The IFP welcomes the initiative by the Competition Commission which is conducting a preliminary probe into fees and charges in the banking industry. The IFP has long been vocal on the subject of South Africa's exorbitant bank charges which the party believes are the highest in the world.

"Affordable banking services are the prerequisite of a maximum participation in the economy at all levels. The South African banking industry is failing the masses badly by deliberately excluding large pools of the rural population due to excessive charges," said Dr Lionel Mtshali MPP, who leads the IFP caucus in KwaZulu-Natal Provincial Parliament and holds the party's Finance and Economic Development portfolio.

A report that has triggered the probe on the part of the Competition Commission, found the ability of consumers to make rational choices was undermined because the full costs of banking services were rarely spelt out.

The report, commissioned by the central bank, found that the four main banks -- Absa, Standard Bank, FirstRand and Nedcor -- accounted for 83% of total deposits by the public in June 2003. The report also states that since 1999, average annual credit card fees at major banks grew by 29% and service fees on current accounts doubled.

Dr Mtshali also said:

"While the exorbitant bank charges are pushing the rural poor into the informal sector, the ultimate losers in this gamble are the banks themselves. They are losing out on a huge, largely unexplored market.

"The IFP welcomes the upcoming probe on principle. A parallel intervention conducted by the European Commission, the executive branch of the European Union, resulted in massive fines for a number of Austria's major banks for breach of competition. We would like to see similar action taken in this country."

Contact: Dr Lionel Mtshali, 083 256 4902