Nedbank supports National Treasury proposals related to Banking Enquiry outcomes

On 31 May 2010, Nedbank met with the Minister of Finance Pravin Gordhan, to discuss issues of concern in the banking industry and to track progress in terms of the recommendations made as a result of the Competition Commission enquiry into bank fees.

Nedbank believes that consumers benefit from healthy and fair competition. It is within this spirit that the bank participated in a cooperative and open manner in the Competition Commission Banking enquiry process since August 2006.

In this vein, Nedbank welcomes and supports the proposals emanating from the National Treasury process.

‘Since 2005, the bank has done extensive work on improving the value of our products and in simplifying our fee structures. We have also pursued several initiatives over this period to demonstrate our commitment to playing our part in making banking more affordable and accessible to all South Africans,’ says Saks Ntombela Managing Executive of Nedbank Retail.

Nedbank’s response to the Treasury recommendations is outlined below.

Debit Order Penalty

· Nedbank has consistently stated its preference for clients to honour payment commitments and avoid incurring penalty fees.

‘We continuously strive to offer new services to better equip our clients in managing their accounts and the honouring of payments on their accounts more proactively,’ says Ntombela.

Tools offered:

· The launch of the Nedbank Personal Money Manager (free to all Nedbank Current and Savings account clients) and the recent introduction of the eNotes active account update service are good examples of this approach.

· Nedbank has exciting plans to continue to develop new services along these lines, including the service outlined in the National Treasury proposal to pursue a real-time mechanism/alert to notify a client of a pending debit order. This service alerts the client to replenish funds within 12 to 24 hours, failing which will result in a rejected transaction and will attract a penalty fee as disclosed in the notification message.

Debit order management

· Nedbank clients are able to stop a specific debit order at any Nedbank Branch, and via the Nedbank Contact Centre for greater convenience.

· Nedbank is however not in a position to cancel the debit order as the legal contract is held by a third party that is providing a service to the client. The client is legally required to cancel the debit order with the collecting service provider directly.

· Nedbank currently reverses penalty fees associated with dishonoured debit orders that are proven to be unauthorised.  

ATM pricing transparency

‘Nedbank was not convinced by the analysis in the report nor its recommendations that a change to a Direct Charge model for ATM transactions would deliver the desired benefits to consumers or that it was necessary.

’We believe that the fees that consumers pay should be simple to understand, in order to know upfront what they are going to be charged when they use an ATM. This is why we support the National Treasury proposal,’ adds Ntombela.

Cash back at point of sale

· Nedbank has focussed on providing access to cash in more convenient and cost effective ways for its clients through the introduction of cash withdrawals at supporting merchants’ point of sale devices.

· Nedbank views the broader take-up of this service as a win-win for its clients and the bank respectively.

· Nedbank is well positioned in South Africa for the delivery of such a service, as it is one of the largest acquirers of point of sale transactions with 42 000 devices in market.

· Offering a cash withdrawal service at a point of sale machine supplements Nedbank’s ATM footprint substantially and improves the bank’s ability to deliver a cash service to its clients.

· A cash advance at a point of sale offers great value for money for clients.

MPESA launch expected to enhance cash services

· Nedbank’s relationship with Vodacom to launch M-PESA in South Africa, will bring banking services to consumers in an affordable and relevant way

· M-PESA offers a cash alternative as an easy to use, person to person mobile money transfer service and it serves as a banking alternative.

· M-PESA is an innovative way to reach a large number of the unbanked and will create opportunities for new cash distribution services.

Bank-Customer Conduct

· Nedbank supports any initiative that makes it easier for consumers to switch banks, including measures to provide increased comparability between banks.

· Nedbank is currently an active participant in the Banking Association work group to address the market conduct recommendations deemed appropriate for addressing, on an industry basis. This includes work groups formed to create standards for disclosure and standardised terminology.

· Nedbank is also an active, supportive member of the Banking Association work groups to develop a switching code.

· Nedbank supports the discussions to create a cost effective way to FICA clients.

· Nedbank will continue to provide competitive and relevant products and services for low income customers. The bank already offers a fee option product to these consumers. Should consumer feedback indicate the need for banded and bundled options, Nedbank will certainly pursue these.

· Nedbank continues to pursue different services to disclose prices and product information to consumers.

Independent Nedbank actions to empower consumers with transparent and affordable products

· Nedbank, in its own right, has been reducing and simplifying fees to bring clients the best possible combination of products and services at the right price since 2004.

· Nedbank’s fees on its personal transaction accounts were unchanged in 2005, reduced by an average 13% in 2006 and again by 6% in 2007.

· Since, then Nedbank has implemented modest, at or below inflation increases. This includes the latest pricing review in January 2010.

· Nedbank has introduced innovative tools to assist clients’ understanding of fee structures, and to enable ease of comparison across various banks. This facilitates informed decision making for consumers.

· To ensure that this service is available to all clients, including those that do not have access to the internet, a dedicated Pricing Call Centre manned by qualified staff is available, together with an online fee calculator which can be accessed on http://www.nedbank.co.za/.

· Nedbank provides tips to clients on how they can reduce their bank fees on its website, and via the Pricing Call Centre and in the pricing brochures that are freely available in Nedbank branches.

· The quality of Nedbank’s fee schedules and brochures has been improved to ensure greater transparency of all line items.

· Fee tables are written in plain language for easier understanding and are readily available from all client-facing channels including Branches, Call Centres and http://www.nedbank.co.za/.

· Nedbank introduced an improved version of its personal transaction account statements to enhance the ability for clients to understand their typical behaviour and the resultant fees on their accounts.

Assisting clients to switch to Nedbank

· Nedbank offers a high quality hassle free service to assist new clients in moving their current banking relationship to Nedbank from another bank. This service includes a debit order switching service, and branchless account opening procedures.

· The hassle free service assists in overcoming the perceived burden for clients to switch banks.

Interchange recommendations

· Nedbank supports the recommendation (notwithstanding disagreement with certain aspects of the underlying analysis).

· Nedbank will continue to cooperate with the National Treasury and the SARB as required to ensure a mutually acceptable outcome.

Access recommendations

· The National Payment System is the domain of the South African Reserve Bank (SARB). Nedbank is supportive of the objectives being pursued by the SARB.

Supporting notes:

· Currently, Nedbank’s debit order dishonour fees for low income clients range between R0 – R10, and for other clients they range between R28 – R80 (for less than 4 rejections within a 12 month period)

· Many debit orders for clients in the lower-income bracket are processed using the Early Debit Order system. Nedbank does not charge any penalty fees for Early Debit Order (EDO) payment default by clients, regardless of the type of account held with Nedbank.

· Cash advance at point of sale transactions cost R2.25 per withdrawal on its Transactor and Mzansi and R3,65 on Nedbank current account.