Banks have had no option but to increase charges, Bob Tucker, chief executive of the Banking Council, says.
Tucker, who represented the banking industry at this week's parliamentary hearings into bank charges, acknowledges that the fees have been rising steadily over the last four years. But, he says, these increases are necessary because of the need to maintain profits and keep shareholders satisfied.
Like any other business, banks have to produce a satisfactory and sustainable return on shareholders' investments, he says.
Tucker says to sustain profits the banks have taken several steps:
* Banks only open accounts other than savings accounts if you have a regular job and receive a salary from an employer;
* ATM withdrawal charges have been increased significantly because of the cost of moving and storing cash, but all the major banks have a policy that if you maintain a certain balance, ATM withdrawal charges can be minimised or even avoided;
* You will pay more and more to deposit cash as the banks try to meet the cost of counting, storing and transporting the money;
* You pay more for transactions through a teller than at an ATM as it costs more to issue money over the counter than at an ATM.
* Some banks have introduced a monthly administration charge to cover the cost of administering your savings or cheque accounts, because as long as the account is open, the banks have to make it accessible regardless of whether or not you use it.
* Charges for cheques have increased in line with inflation.
But the banks still do not recover the full costs of transactions from you, Tucker says.
From 1993 banks' costs have increased sharply. Cash handling costs are rising and the price of computer equipment, mostly imported, has been affected by depreciation in the value of the rand.
Until recently savers and high-income clients have been subsidising other clients. But now that new niche and foreign banks are competing in the top end of the market, domestic banks have to match their services and stop the cross-subsidisation, Tucker says.
High levels of cheque fraud have also pushed up the banks' costs. In 1998, for example, the banks lost R151 million on cheque fraud; 3,2 million cheques were returned and 173 000 cheques were lost of which a high percentage were stolen.
FAIR TREATMENT
Tucker says consumers are being treated fairly taking into account:
* The cost of providing banking services;
* The charges you pay for those services;
* The comparative charges of those services in developed countries, and
* The returns of about 20 percent that shareholders are earning on their capital when they could be earning 32 percent in companies like Pick'n Pay and Shoprite which have a similar risk profile.
Tucker says if clients were to get a better deal, it would be at shareholders' expense and the industry's strength would be severely eroded.
But that does not mean that you shouldn't have better disclosure from your bank or that the banks should not act according to a code of conduct, he says.
You should also have quick and cheap redress if you are unfairly treated.
WHAT THE BANKING INDUSTRY PROPOSES
* All borrowing by the public should be protected by a single piece of integrated legislation;
* The Usury Act should be scrapped and the useful protection measures should be included in new consumer lending protection legislation;
* The state has a responsibility to protect you and a body, such as the Financial Services Board, should regulate the industry; and
* The micro-lending industry should be developed to provide credit to lower income communities and possibly even the higher value markets in the future.