“He who pays the piper calls the tune,” rings a timeless English idiom. The theory holds if you pay for someone’s services you get to dictate the result. Unfortunately the idiom doesn’t hold for South African consumers. The fortunes we shell out on bankin
That leaves two avenues for consumer retribution. One is to express your dissatisfaction online on ‘name-and-shame’ websites like http://www.hellopeter.co.za/. And the other is to lobby regulatory bodies like the Competitions Commission and the Independent Communications Authority SA (Icasa) for assistance. The online route expedites complaints resolution and provides potential consumers with plenty of ammunition to avoid troublesome providers. But approaching regulatory institutions is less successful. While the Competitions Commission is great at punishing certain industries – just ask Tiger Brands or Sasol about the huge fines they received for price collusion recently – they seem powerless when pitted against corporate giants in the banking and mobile telecommunications space. We can think of two recent consumer spats that support this assertion.
Who us? Banks always come out smelling like roses
About three years ago, the Competitions Commission established a banking enquiry panel to investigate pricing activity in the domestic bank environment. After two years of deliberation the panel released a 600-page technical report. Their conclusion: Bank charges are too high and banks should implement reforms to address the situation. But despite evidence of poor price transparency and allegations of collusion in setting interest rates on loan products the Competitions Commission doesn’t have the stomach for a protracted banking sector battle. They showed their true colours when they sided with banks in blacking out portions of the report. “It is the view of the Competition Commission that the affected sections do not materially harm the report’s legibility or the reader’s comprehension,’ they said. But before the anti-censorship bodies had a chance to object an opportunistic hacker posted the unedited original on the web!
The Commission deserves praise for initiating the investigation. But consumers aren’t going to benefit unless banks’ behaviour changes. In the absence of follow up action from the Commission banks have carte blanch to operate their businesses as they see fit, without any fear of regulatory intervention on pricing activity. That’s why consumers have to digest above inflation price increases on a range of services each year. There are simply so many ways of getting bank clients to pay over the odds. Recent innovations include ledger administration fees for accounts with overdraft facilities, significant increases in monthly administration fees on bond accounts and ludicrous jumps in initiation fees on mortgages. We recently received a communication from our bank informing us that our monthly bond administration fee would be higher if we didn’t insure our home through them. Watch this space for more on that story!
We’ll have to leave the war against super profits in the baking industry to the increasingly eccentric Reserve Bank governor, Tito Mboweni. Speaking at the launch of the latest Monetary Policy Review, Mboweni challenged the 350 basis point spread between the banks’ lending rates and the central bank’s repo rate. “There is nothing automatic that says the spread must be 3.5%,” he said. He appealed to private banks to think about this rate, adding that it didn’t have to be the same between banks. “There needs to be some competition here!" said Mboweni. We’re not sure if the governor is on the right track. Most analysts point out that banks offer discounts on their prime lending rates which vary across product and client – and that’s where inter-bank competition takes place. But as consumer we welcome the noise Mboweni is making.
Mobile phone companies never accept blame either
It’s the kind of noise that got Icasa to call in the cellular service providers recently. After numerous consumer complaints about dropped calls, network availability and delayed text messages the communications authority cried enough. Quoted in The Times, Icasa spokesperson Sekgoela Sekgoela said, “the mere fact that we called a meeting with them shows how concerned we are.” Icasa summoned Cell-C, Vodacom and MTN to a hearing to explain the dismal service levels. But that’s as tough as things got for South Africa’s phone giants. In their response, MTN said its dropped call rate of around 1% was way better than the 2% international benchmark. And both Vodacom and MTN perform above 99.5% on the Call Setup Success Rate (CSSR) measure. The majority of delays in SMS delivery occurred due to recipient phones being unavailable. Poor service in the industry wasn’t their fault, they said. Instead fingers were pointed at Telkom and Eskom. We reckon if the providers cared more about their customer they would have apportioned some of the blame to them too.
But Africa’s largest cellular service provider is missing the point when it blames Telkom for 53.11% of all its network faults. Perhaps the following explanation will help. MTN sells a service to its customers. To provide this service MTN contracts to a variety of third party suppliers. When a consumer experiences a delay or deterioration in service the fault lies with MTN and not the third party supplier. In other words – as a user of mobile telecommunications services you don’t care about MTN’s problems with Telkom or anyone else. MTN must carry the bag for not enforcing rigorous service levels on its suppliers… But we expect there’s much more to the story than MTN or the other mobile providers shared with Icasa.
Tshwane municipality’s double-billing fail!
The great thing about banks and cell phone service providers is that we still have a choice. The same cannot be said for local municipalities, whose blatant billing abuses often put the private sector to shame. At a time when consumers are snowed under record levels of debt, the Tshwane Metro Council decided to double-bill ratepayers in May 2009. Their reason – provided after the double-billing debacle took place – was to “bring collections in line with the Municipal Property Rates Act. In plain English, they decided to change from an arrears billing system (where consumers receive the services (sic) and then pay) to an advance billing system (where consumers pay and then receive services). Opposition parties reckon the move was a desperate attempt to ward off serious cash flow problems. But the reason for the change isn’t the real issue.
The real issue is how poorly the municipality is treating its customers. Concerns over indebtedness aside, consumers are up in arms because the municipality double-billed them without prior notification. It’s not like there’s a shortage of communication channels available to them. At the very least they could have included details of the billing change with the monthly account sent to every ratepayer by post.
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Added by Also Fed Up, 25 May 2009