1. Implementing the Banking Enquiry’s recommendations Phil Alves 15 October 2010

2. History Falkena (2004), FEASibility (2006) Multiple complaints received over time, but none were particularly ‘actionable’ Raised myriad concerns – Pricing – Choice – Service quality – Access, entry, expansion – Extremely complicated regulatory environment Need for an Enquiry to ‘diagnose’, not ‘witch hunt’

3. Recommendations 5 broad classes aimed at improving or reforming – Consumer protection Penalty fees Disclosure and transparency – Interbank switching (churn) – Access to the national payment system – Interbank arrangements for ATMs – Interbank arrangements for payment cards and electronic payments No clear recommendations to initiate investigations as first-best options

4. Challenges Timing (financial crisis) Recommendations made independently, to the Commission – time needed to assess Recommendations carry no legal status Enquiry could impose no deadline by which regulators or industry participants must (legally) respond The Competition Commission has no policymaking powers, and no powers to issue instructions Banking is different – Inter-governmental cooperation necessary but tricky – Multiple policy objectives or priorities

5. Process Inter-governmental committee Consulting with SARB, PASA and BASA Consulting with industry participants Treasury expectation that industry players should voluntarily adopt what they could individually

6. Progress Has been slow Lower hanging fruit identified and taken forward – Most consumer protection and switching recommendations Some recommendations discarded or shelved – Standardised consumer profiles – ‘Appropriate application of pricing initiatives’ Complex recommendations demanded much closer scrutiny Treasury announcement June 2010 – Commitment to proactive ‘market conduct’ regulation in retail banking

7. Way forward Still researching longer term solutions for – Interbank ATM pricing model – NPS access – Second tier entry How do we change consumer perceptions and attitudes? In the meantime, encouraging changes are taking place in the industry