The Financial Sector Conduct Authority has launched a comprehensive project to assess the banks’ transactional fee practices, says Finance Minister Enoch Godongwana.
This disclosure was prompted by a parliamentary question from Economic Freedom Fighters MP Omphile Maotwe, who asked whether National Treasury was investigating “exorbitant” bank charges and whether there was a policy to address expensive fees.
In a written reply dated 14 February, Godongwana confirmed that the FSCA, as the authority responsible for overseeing the market conduct of banks, is conducting this investigation, to determine whether further regulatory or policy interventions are required.
Through its ongoing supervisory activities, the FSCA has identified several variations in the pricing approaches and structures among different banks. In some instances, there are significant disparities in fees charged for the same or relatively similar products or services. Additionally, the Authority has noted concerns about the lack of adequate disclosure by some banks, which contributes to poor understanding of these fees by customers, Godongwana said.
The FSCA published a Conduct Standard for banks in 2020, which took effect in July 2021. The Standard mandates that banks conduct their business in a manner that prioritises the fair treatment of financial customers. Specifically, it stipulates that a bank providing financial products or services must ensure that the terms, conditions, and requirements in a contract with a retail financial customer, including fees and charges, are not unfair.
“While the Conduct Standard does not prescribe or stipulate what would constitute an unfair or ‘exorbitant’ fee or charge, banks must be able to demonstrate that the basis for their fees and charges are reasonable and that these fees and charges do not result in unfair outcomes to financial customers. It is on this basis that the FSCA will be conducting the assessment,” the minister said.
