Gavin Opperman, group executive secured lending, responds to Charl Strydom’s letter: I do understand and acknowledge that customers are finding themselves in a difficult situation. We are also experiencing similar conditions and in the current operating environment lenders have found their costs rising.
Our fee structures and those being levied remain within the National Credit Act’s stipulated structures that banks are allowed to recover. In terms of the Act, banks aren’t allowed to increase interest rate concessions – ie, change interest rate pricing. In the past, administration fees were cross-subsidised from interest margins. Also, given the prevailing and changing economic conditions, funding for banks has become increasingly more expensive, resulting in margin erosion. Given those reasons it has become evident that we levy costs incurred by the bank to the appropriate cost items – ie, running costs to the administration fee charge.
The running costs include the likes of credit monitoring, collections, functionalities, statement mailings, security and servicerelated administration and the technological capability. All of those enable us to offer a better service to customers. Considering market demands, Absa also deemed it necessary to introduce additional services to their clients, which include the debt repair line and risk mitigant officers (RMOs) who assist clients in distress and need guidance as to how to manage their debt burden.