Absa had the sharpest bank fee increase - Solidarity

Capitec cited as cheapest, but FNB says its entry account excluded.

JOHANNESBURG – Capitec was the only bank to keep its bank fees unchanged in 2011, while Absa reportedly had the highest increase of bank charges this year compared to 2010, maintaining its position as the most expensive bank among the five main retail banks, according to a Solidarity Bank Cost Report.

The report was done by trade union Solidarity with information collected between September 22 and October 5, this year. Solidarity did acknowledge though that people’s bank fees were also driven by transaction behaviour.

The report shows that for Absa’s cheapest account, the bank increased charges by 8% or R11.25 to R152.15 in 2011, while Nedbank had the second highest rise of 7% (R6.87) to R105.04. First National Bank increased its fees on its cheapest account by 5.1% (R3.56) to R73.10 and Standard Bank hiked by 4.3% (R5.45) to R133.43. Capitec’s charges remained unchanged at R67.35.

Overall the Solidarity Report said Absa was the most expensive bank followed by Standard Bank and Nedbank, while Capitec was the cheapest followed by FNB. There was an 8% difference in the banking fees of FNB and Capitec.

As much as Capitec was the cheapest, Solidarity noted that the Stellenbosch based bank did not offer the option of a credit card, overdraft facility, cheque book and cellphone banking. So if a client wanted these offerings then FNB offers the cheapest current accounts. However, Capitec does pay interest on positive balances.

A shortcoming of the research was that it did not include cheaper entry level accounts, such as FNB’s EasyPlan, Absa’s 1234, Nedbank Ke Yona and Standard Bank’s “Bank Shop”. Solidarity noted that EasyPlan was not included because there were certain restrictions on this account.

The report said the administration of the account must be handled at a specific EasyPlan branch and that higher fees equivalent to those of the FNB Smart Account were charged on transactions done at ordinary FNB branches.

However, Solidarity’s senior researcher Paul Joubert said these restrictions should not stop people from exploring entry level accounts, especially if the offering suited their banking needs.

Responding to the report FNB’s CEO of Smart Transactional Banking James Fowle said although FNB's Smart Unlimited account fees were R5 higher ( R73.10) than Capitec's (R67.35), FNB offered far more than R5 in additional value.

“FNB benefits include free inContact, free funeral cover, free online banking and free cellphone banking. FNB sends free SMSes to customers telling them about cheaper channels - such as when they use another bank's ATM or make withdrawals in a branch. We educate our customers when they use such expensive channels,” Fowle said

“The majority of FNB customers do not incur charges per transaction as they use accounts with unlimited electronic transactions such as point of sale and FNB ATM, online and cellphone banking...The Solidarity report states that they have excluded FNB EasyPlan.FNB EasyPlan with 131 branches across South Africa offers the lowest costs at under R40.”

Fowle also said that the Advertising Standards Authority found that FNB's EasyPlan offered the lowest cost banking and “Capitec was forced to withdraw their advertising claiming to be the cheapest bank”.

On this Capitec referred Moneyweb to Solidarity’s comments that the FNB EasyPlan had some restrictions.

Capitec’s Head of Marketing and Corporate Affairs Carl Fischer said “being named the cheapest retail bank in the 2011 Solidarity Report confirms what we have known all along – Capitec Bank offers the most affordable banking fees in South Africa. And this applies to all our clients, not just segments of them. We are pleased that the findings have validated our position as market leaders in transaction fee pricing,” .

“We are committed to offering a simplified, value-driven transparent service to all our clients so they know what they get; and know what they pay. This empowers them and gives them control over their own money.”

Absa, Standard Bank and Nedbank had not responded at the time of our deadline.

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