Review of the Competition Commission Banking Enquiry for the Competition Commission of South Africa, 2014

Sha’ista Goga, and Ryan Hawthorne conducted a review of the Competition Commission's banking inquiry for the Competition Commission, including a review of interchange. The Competition Commission launched the Banking Enquiry in August 2006 and published its findings and recommendations in June 2008. These recommendations included a range of measures to stimulate greater competition in retail banking and protect consumers, including: a cap on fees for rejected debit orders, a move to direct charging by ATM providers, a change to the determination of interchange in payment card and other relevant payment streams, the removal of restrictions on cash-back at point of sale, rule changes to allow non-bank providers of payment services to participate in clearing and settlement, changes to the rules of the Payments Association of South Africa (PASA), changes to the code of banking practice and measures to assist with the comparison of different products by customers and facilitate switching. The review conducted by Acacia Economics considered the extent to which these recommendations have been implemented, and the impact that they have had on competition in the sector. The review found that some positive changes have been observed in the industry, particularly in relation to the transparency of ATM charges and pro-consumer commitments in the Code of Banking Practice. However, several recommendations had not been implemented such as those seeking to improve comparability across bank products and to move from interchange pricing on ATMs to direct charging. Although some smaller new entrant banks had grown since the Enquiry, it was found that there is a need for greater consideration of competition issues in the regulation of the sector as well as measures to facilitate switching, greater independencs of PASA and a risk-based prudential regulatory framework for current non-banks.