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this is to do with South African Bank exec admits British banks charge penalties - Legal Beagles posted january 2008
:beagle:
not sure on the legalitys of posting this hence in here
December 2008 - Banking enquiry report to competition commission in south africa
READ THIS BIT
soooo cost R1.42 charges are R40
doesnt take much to do the maths over to our banks 
have we seen this ?
Docs too big to upload. 505 pages pdf. Was from FOI request with redacted info. SOME info has been unredacted (including those costs bits)
Redacted version is http://www.compcom.co.za/banking/Non...lty%20Fees.pdf
:beagle:
not sure on the legalitys of posting this hence in here
December 2008 - Banking enquiry report to competition commission in south africa
In Chapter 4, the Panel examines the issue of Penalty Fees confining its analysis to the fees
charged by banks to their individual retail customers when a customer’s payment order is
refused, usually due to a lack of funds. These fees, commonly referred to as “dishonour
fees”, are charged for rejected cheques, debit orders, and stop orders. The analysis
concentrates on the fees charged by the major banks for rejected debit orders, an area
where there are clear indications of growing abuse. The amount of revenue of almost R1
billion (of about R11 billion non-interest revenue for personal transaction accounts) that was
generated by the big four banks in 2006 from around 24 million dishonoured or rejected
transactions is highlighted. In our view, the abuse of debit order dishonour fees needs to be
addressed without delay.
charged by banks to their individual retail customers when a customer’s payment order is
refused, usually due to a lack of funds. These fees, commonly referred to as “dishonour
fees”, are charged for rejected cheques, debit orders, and stop orders. The analysis
concentrates on the fees charged by the major banks for rejected debit orders, an area
where there are clear indications of growing abuse. The amount of revenue of almost R1
billion (of about R11 billion non-interest revenue for personal transaction accounts) that was
generated by the big four banks in 2006 from around 24 million dishonoured or rejected
transactions is highlighted. In our view, the abuse of debit order dishonour fees needs to be
addressed without delay.
1.4 Visit to the United Kingdom
In March 2006 a delegation of the Commission visited the offices of the UK Competition
Commission and Office of Fair Trading (OFT). The meetings took place over three days from
the 21st March 2006 to the 23rd March 2006. Two half days were spent at the OFT and one
day at the UK Competition Commission.
The main purpose of the visit by the delegation was to learn more about the approach to
similar inquiries that had taken place in the UK and to obtain information as to what was
involved in the planning and organisation of such enquiries. The Commission delegation also
sought to learn more about what the UK regulatory bodies considered to be the important
competition issues in the banking sector which would need to be examined during the
Enquiry.
The OFT provided useful information regarding the Payments System Task Team, which
had been established following the competition issues that had been identified in the
Cruickshank Report.11 The Task Team consisted of dedicated OFT officials who interacted
regularly with officials from the central bank, HM Treasury, and industry through working
groups. There are valuable lessons to be learned here on how to establish a representative
forum to bring about voluntary compliance with certain recommendations. This approach
may prove useful in implementing some of the recommendations arising from the Enquiry
Panel’s report.
The delegation also held discussions with OFT officials regarding their investigations into
interchange fees of four-party payment card schemes.
The meeting with the UK Competition Commission proved to be most beneficial insofar as it
informed the conception, planning and organisation of the Banking Enquiry. The UK
Competition Commission officials explained the regulatory framework within which the
Northern Ireland Banking Inquiry came to be established and what was involved in the
establishment of an expert Panel, the secretariat responsible for the administration of the
inquiry, and the technical staff from the UK Competition Commission supporting the Panel
and inquiry. Although the South African Banking Enquiry was established in terms of a
different regulatory framework there were nevertheless many aspects of the UK inquiry that
were adopted for purposes of this Enquiry, in particular, the role played by the secretariat in
administering the Enquiry and the process of Technical Team engagements with industry
participants and other stakeholders.
11
In March 2006 a delegation of the Commission visited the offices of the UK Competition
Commission and Office of Fair Trading (OFT). The meetings took place over three days from
the 21st March 2006 to the 23rd March 2006. Two half days were spent at the OFT and one
day at the UK Competition Commission.
The main purpose of the visit by the delegation was to learn more about the approach to
similar inquiries that had taken place in the UK and to obtain information as to what was
involved in the planning and organisation of such enquiries. The Commission delegation also
sought to learn more about what the UK regulatory bodies considered to be the important
competition issues in the banking sector which would need to be examined during the
Enquiry.
The OFT provided useful information regarding the Payments System Task Team, which
had been established following the competition issues that had been identified in the
Cruickshank Report.11 The Task Team consisted of dedicated OFT officials who interacted
regularly with officials from the central bank, HM Treasury, and industry through working
groups. There are valuable lessons to be learned here on how to establish a representative
forum to bring about voluntary compliance with certain recommendations. This approach
may prove useful in implementing some of the recommendations arising from the Enquiry
Panel’s report.
The delegation also held discussions with OFT officials regarding their investigations into
interchange fees of four-party payment card schemes.
The meeting with the UK Competition Commission proved to be most beneficial insofar as it
informed the conception, planning and organisation of the Banking Enquiry. The UK
Competition Commission officials explained the regulatory framework within which the
Northern Ireland Banking Inquiry came to be established and what was involved in the
establishment of an expert Panel, the secretariat responsible for the administration of the
inquiry, and the technical staff from the UK Competition Commission supporting the Panel
and inquiry. Although the South African Banking Enquiry was established in terms of a
different regulatory framework there were nevertheless many aspects of the UK inquiry that
were adopted for purposes of this Enquiry, in particular, the role played by the secretariat in
administering the Enquiry and the process of Technical Team engagements with industry
participants and other stakeholders.
11
Nevertheless, on savings accounts, FNB
reported a transaction cost of R1.80 per successful debit order, while Nedbank reported a
cost of R1.42 per successful debit order, compared with the cost of a rejected debit order of Confidential:
R4.18 and R4.88 respectively. These values bear no evident relationship to the fees charged
per debit order and rejected debit order on, for example, the FNB Smart and Nedbank
Transactor accounts.
reported a transaction cost of R1.80 per successful debit order, while Nedbank reported a
cost of R1.42 per successful debit order, compared with the cost of a rejected debit order of Confidential:
R4.18 and R4.88 respectively. These values bear no evident relationship to the fees charged
per debit order and rejected debit order on, for example, the FNB Smart and Nedbank
Transactor accounts.
Mr. Shuter of Nedbank maintained at the hearings that
“the level of penalty fees in Nedbank are reasonable relative to the various costs the bank
incurs when clients default relative to the market”, but Nedbank’s own costing figures for
rejected debit orders – which he insisted should be kept confidential – show this not to be
so.10
“the level of penalty fees in Nedbank are reasonable relative to the various costs the bank
incurs when clients default relative to the market”, but Nedbank’s own costing figures for
rejected debit orders – which he insisted should be kept confidential – show this not to be
so.10
have we seen this ?
Docs too big to upload. 505 pages pdf. Was from FOI request with redacted info. SOME info has been unredacted (including those costs bits)
Redacted version is http://www.compcom.co.za/banking/Non...lty%20Fees.pdf
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