South Africa’s big banks called up over fees, credit profiles, and more

 ·17 Jan 2025

The Portfolio Committee on Trade, Industry, and Competition and the Standing Committee on Finance have summoned major banks “to understand their credit lending practices… as well as progress in contributing towards the transformation of the economy.”

In a joint statement published on 17 January, the Committees said that the Banking Association of South Africa and major banks, including ABSA, Capitec, FNB, Investec, Nedbank, and Standard Bank, had confirmed their attendance for the February meeting.

The Committees said that the meeting would be “a fact-finding mission” informed by observations made following their meetings with the National Credit Regulator, National Treasury, and the Competition Commission.

Mzwandile Masina, chairperson of the Portfolio Committee on Trade, Industry and Competition, said this forms part of enhanced oversight over the financial sector and its developmental role in South Africa.

It has been alleged that it is easier to secure credit for consumption purposes than for production.

Masina said that this lending approach “is disempowering, particularly for previously disadvantaged people.”

“As Parliament, we have a constitutional duty to conduct oversight over the implementation of legislation in the interest of consumer protection and facilitating transformation,” said the Chairperson.

“Banks, as regulated entities, should be open and fair about their lending practices, in particular, the calculation of interest, confidentiality clauses and the fine print on credit agreements,” he added.

The Committee chairperson said that the meeting “is to ensure that the banking sector in South Africa is open, transparent and of service to poor people to facilitate inclusion in the productive sectors of the economy.”

In addition, the committees will be inviting the Financial Sector Conduct Authority (FSCA) to discuss:

  • The state of banking in South Africa, the credit profile within the sector;
  • Ratios of consumption credit versus productive credit per bank;
  • Bank charges;
  • State savings; and
  • The Protection of Personal Information Act (POPI Act) relates to the confidentiality of clients.

Additionally, the committees will discuss the expected impact of the Conduct of Financial Institutions (COFI) Bill on lending practices and the progress in implementing the Financial Sector Charter.

“We invited the banks to engage them on issues that negatively affect ordinary and vulnerable members of society,” said Masina.

“It would be ideal if the banks worked to advance and support economic development across all segments of society,” he added

Chairperson of the Portfolio Committee on Trade, Industry and Competition, Mzwandile Masina

This move is not a sudden development, as Masina has hinted at calling on the big banks to account for some time.

In 2024, Masina expressed concerns over alleged excessive service charges and restrictive credit practices that hinder small businesses from accessing capital, stifling economic growth and innovation.

Masina has been critical of what he labels as the banking sector’s lack of competition and arbitrary decision-making and called for more cooperative financial governance.

“The banks make unilateral laws that do not make sense, and we have to hold them accountable,” he said at the tail-end of 2024.

“This includes charges to individuals and to institutions of government. They will appear before us to have a conversation on what areas can be tightened,” he added.


Read: The plan to triple South Africa’s economic growth

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