Eskom is not the only black-out specialist
At the beginning of last year the press was littered with stories about Eskom’s inability to provide electricity. Not a day went by without some reference to power outages, load-shedding and (everybody’s favourite) black-outs. But Eskom isn’t the only black-out specialist. As we enter 2009 everyone is talking about the Competition Commissions decision to censor various paragraphs in their 590-page report on fee-practices in the local banking environment.
The Competition Commission used a feature in Adobe Acrobat (an application that allows users to create and publish documents in PDF format) to mask various comments before they distributed the report. It’s the equivalent of using a black marker to block out text on paper document. We’ll refer to their hi-tech censorship aid as the ‘black-out’ technique! And here’s the problem!
It wasn’t long before an inquisitive someone worked out how to crack the so-called encryption applied by the Commission. They simply exploited a flaw in the software to uncover the censored information before forwarding the uncensored report to www.wikileaks.com. You can download the report at that address to this day!
What did the banks want to hide?
Before we continue, I have a confession to make. Trawling through 590 pages of waffle on bank transaction fees – censored or not – isn’t my idea of fun. In fact I can’t think of many people who would have bothered to flip through the entire report. So the comments in the next couple of paragraphs are courtesy of an article by Rob Rose, published in this week’s Financial Mail. He reveals that the country’s big-four banks demanded no less 216 excisions (Absa 69, FNB 74, Nedbank 46 and Standard Bank 29).
Most of the censored comments are admissions by banks that certain fee-practices are heavy-handed. In one example, banks admit that cost savings due to technological advances and increasing numbers of transactions aren’t necessarily passed on to consumers. Another comment reveals the banks’ cavalier attitude to the punitive charges levied on accountholders who bounce debit order instructions. One bank even admits that their internal costing shows these fees to be unreasonable. Another section of the report deals with the fees charged by Visa and MasterCard on credit card transactions. These fees vary between 1.5% and 7.8% of each transaction and are ‘shared’ between banks and the credit card administrators.
In short, we haven’t learnt anything new about banks from this censorship debacle. Everyone knows that these institutions aim to maximise profit for their shareholders and that their complex transaction-fee structures are designed to make it near impossible for consumers to compare one product offering with another. The real issue is why the Competition Commission gave in to the banks demands to censor sections of the report. “We did it for the sake of progress, to get this thing out there without further delays,” says competition commissioner, Shan Ramburuth. We suppose if the Commission had not agreed to these ‘cuts’ the banks and their lawyers could have prevented its publication for an unlimited period of time.
Finding new ways to hike fees!
At the beginning of each year we get a letter from our banks telling us about their proposed fee increases. Despite the promise that the average transaction-fee increase is at (or below) the official rate of inflation, we usually end up paying well in excess of that amount. Think about it for a while and you’ll find plenty of examples.
A couple of years ago my bank started charging me a monthly ledger fee every time I dipped into my overdraft. This fee is over and above the ridiculous amount of interest already charged for the privilege of ‘borrowing’ the money. It’s only R20 or so; but multiply the amount over thousands of accounts and you’re soon in super-profit territory. Mortgage loans provide another excellent example of excessive fees in practice. After charging an initiation fee and an inspection fee at the loan inception, banks feel it’s necessary to administer a monthly admin fee too! This charge is over and above the healthy interest banks earn on the outstanding capital. And the fee is higher for bigger bonds despite the ‘service’ being exactly the same.
But my favourite example of ‘price increase by stealth’ came earlier this year. In 2008 my bank charged me 60c to send a payment confirmation from my Internet account. Since the beginning of this year the amount has gone up to 85c – an increase of some 41.66%. I don’t know about you; but I can buy an SMS bundle at 30c per SMS while an email is virtually free!
Editor’s thoughts:
South African consumers are so ‘in the dark’ about charges levied on their banking transactions that it hardly matters if some facts are kept secret. The ‘uncensored’ report simply confirms what we already know – banks aren’t shy about maximising profit! Should the Competition Commission have acceded to the banks’ requests for confidentiality – or should they have published the report in its original form? Add your comments below, or send them to [email protected]
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