The Reserve Bank is calling for a detailed macro-economic impact assessment on the proposed changes to the fees and interest rates banks charge clients‚ to avoid negative consequences to the economy.
Not adequately interrogating the consequences of regulatory changes before implementing them can be economically damaging‚ as the recent stringent visa regulations and their adverse effect on tourism and tourist numbers have shown.
“It is difficult to estimate the impact on consumers and the economy that these proposed changes will have‚ without granular data on each category of loans‚” head of financial stability at the bank Hendrik Nel said.
The bank released its September financial stability review on Wednesday.
As of last month‚ all future legislation and regulations will be subject to a socio-economic impact assessment before being passed to avoid negative economic consequences according to the medium-term budget policy statement.
The Department of Trade and Industry said a thorough impact assessment of the draft review of limitations on fees and interest rates that proposes caps or ceilings on fees and interest rates applicable to credit agreements such as personal loans‚ had been done.
“The department ... a balancing act needed to be done in capping fees and interest rates that would be fair on the consumer‚ but still ensure that businesses get what they need to remain sustainable‚” the director for credit law and policy at the department Siphamandla Kumkani said.
All consultations had been concluded and the final review would be released by the minister “in due course”‚ he said.
The department contends that this review could help bring down high levels of household over-indebtedness. The proposed changes will affect a broad range of regulated financial institutions‚ including banks and insurers‚ which provide credit in the domestic market.
The Banking Association of SA and analysts have previously warned that banks could raise fees elsewhere if forced to reduce interest rates on loans.
The stability of the domestic financial system could be impeded by high levels of unemployment and indebtedness; and weak global and domestic economic growth‚ the bank warned.
Stress-test exercises aimed at evaluating the soundness of banks had begun and banks were expected to hand over required paperwork to the Reserve Bank in January.
SARB to assess fees, rates
Not adequately interrogating the consequences of regulatory changes before implementing them can be economically damaging‚ as the recent stringent visa regulations and their adverse effect on tourism and tourist numbers have shown.
“It is difficult to estimate the impact on consumers and the economy that these proposed changes will have‚ without granular data on each category of loans‚” head of financial stability at the bank Hendrik Nel said.
The bank released its September financial stability review on Wednesday.
As of last month‚ all future legislation and regulations will be subject to a socio-economic impact assessment before being passed to avoid negative economic consequences according to the medium-term budget policy statement.
The Department of Trade and Industry said a thorough impact assessment of the draft review of limitations on fees and interest rates that proposes caps or ceilings on fees and interest rates applicable to credit agreements such as personal loans‚ had been done.
“The department ... a balancing act needed to be done in capping fees and interest rates that would be fair on the consumer‚ but still ensure that businesses get what they need to remain sustainable‚” the director for credit law and policy at the department Siphamandla Kumkani said.
All consultations had been concluded and the final review would be released by the minister “in due course”‚ he said.
The department contends that this review could help bring down high levels of household over-indebtedness. The proposed changes will affect a broad range of regulated financial institutions‚ including banks and insurers‚ which provide credit in the domestic market.
The Banking Association of SA and analysts have previously warned that banks could raise fees elsewhere if forced to reduce interest rates on loans.
The stability of the domestic financial system could be impeded by high levels of unemployment and indebtedness; and weak global and domestic economic growth‚ the bank warned.
Stress-test exercises aimed at evaluating the soundness of banks had begun and banks were expected to hand over required paperwork to the Reserve Bank in January.
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