BUSINESS NEWS
Bank charges discourage saving
Posted Mon, 06 Nov 2006
Fees charged on savings accounts discourage people from saving, who then use credit more than is needed, the National Credit Regulator said on Friday. Chief executive officer of Gabriel Davel, testifying at the public hearings of the Competition Commission's Banking Enquiry in Pretoria, said that with the exception of one financial institution, the returns on all entry level savings accounts were negative. "If people see negative growth on their savings they stop saving. It is the logical thing to do," Davel told the enquiry which was into its third day of hearings. He said a study indicated that the negative returns were as much as 19 percent, if return debit fees were brought into consideration it was as high as 43 percent. "The effect is that people don't save so when there is a crisis they have to borrow money, which brings on debt," Davel explained. On the National Payment System, Davel said that while many financial service providers had sprung up in recent
years the new competition was negated because these still had to go through banks to get access to the system. The public hearings will continue in Pretoria this week with the second of the big banks, First National Bank, scheduled to testify.
The hearings will then move to Durban and Cape Town. More public hearings will be held in March and April next year.
Sapa
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