The Namibian Competition Commission this week launched investigations against local commercial banks and the Bankers Association of Namibia for fixing interchange rates, possible discriminatory behavior in the provision of insurance for home loans, unfair pricing of certain ancillary services and discrimination in the granting of housing loans to customers belonging to other banks.
Of the two investigations opened on March 10, the first concerns the alleged historic fixing of interchange rates through the Payments Association of Namibia (PAN), by commercial banks. This survey includes PAN and all registered commercial banks including FNB; Banco Atlantico Europa – Namibian branch; BIC Bank Namibia; Bank Windhoek; Letshego Bank Namibia; Nampost Savings Bank; Nedbank Namibia; Standard Bank of Namibia; and Trustco Bank Namibia.
In April 2018, the Commission issued an advisory opinion to PAN (at its request) regarding the collaboration of commercial banks on interchange fees, in which it concluded that such collaboration gives rise to potential price fixing and advised PAN to apply for an exemption in terms of Namibian competition law.
PAN undertook this in August 2019, for consideration by the Commission. In its application, PAN agreed that the interchange model, adopted by its members, sets the interchange fees agreed between Namibian banks through its payment clearinghouse card schedule.
“This conduct has been going on for several years until the request for exemption was granted with conditions in October 2020. Such practice by commercial banks amounts to a possible contravention of the law.
“To this end, the Commission has decided to open an investigation into the alleged historical behavior in the relevant market,” the Commission said.
The second investigation relates to allegations that FNB, Bank Windhoek, Standard Bank and Nedbank charge home loan customers an additional rate on top of interest rates determined by the customer’s financial profile if that customer has their main day-to-day transaction with a competing bank.
According to the Commission, it is also alleged that the banks charge unreasonably high and unfair prices for the provision of ancillary services, namely the issuance of a mortgage pre-approval letter and bank confirmation letters. It is further alleged that FNB, Bank Windhoek, Standard Bank and Nedbank apply different terms to equivalent transactions in the provision of fire cover to home loan customers. Furthermore, it is alleged that FNB, Bank Windhoek, Standard Bank and Nedbank hold a dominant position in the relevant market.
The Commission consulted all parties concerned and gave them the opportunity to respond to the allegations. Upon receipt of the responses to the allegations, the Commission will make an assessment and, accordingly, determine the relevant cause of action.