01.Big banks fee reduction could be better
While CHOICE welcomes the announcement that from October penalty fees for some Commonwealth, Westpac and St George customers will be reduced, the justification for charging added costs remains a concern for the consumer group.
For Westpac and St George customers penalty fees for transaction and credit card accounts will be $9 across the board. The Commonwealth Bank will reduce their dishonour fees to $5 on personal and transaction accounts, overdraft to $10 and the late payment fee on Home and Personal Loan accounts to $25 - but no such reductions have been announced for their credit card accounts.
Both Westpac and St George say it is appropriate to maintain a fee because there are actual costs involved, but what they actually are remains a mystery. “The moves by the big banks to reduce their penalty fees is a step in the right direction but the fact remains that all the banks remain secretive about the cost incurred by them when a customer overdraws their account,” said CHOICE spokesperson Christopher Zinn.
Last week, CHOICE and the Consumer Action Law Centre (CALC) congratulated the National Australia Bank (NAB) for showing leadership by scrapping penalty fees for customers who overdraw or incur dishonours on their transaction accounts. NAB announced that from October it will drop its fees for overdrawing personal transaction and savings accounts, however its credit card penalty fee remains at $30 for a late payment and $25 for going over the limit.
CHOICE and CALC have run a joint Fair Fees campaign for the past two years to combat penalties that can cost up to $50 for bank customers who overdraw their accounts, often through electronic direct debit payments.
“At present, these fees cannot be justified,” said Zinn. “Penalty fees should only allow banks to recoup any losses incurred by the bank, but we know that in the case of credit cards there aren’t any, because the banks continue to accrue interest on any outstanding debt.” ANZ is still reviewing their fee structures, and are yet to make any announcements.
“Last year consumers paid banks almost a billion dollars in unfair penalty fees,” said Zinn. “As far as CHOICE is concerned, until the banks are transparent on this issue we will continue to campaign for all banks to drop unfair penalty fees across all accounts.”
Since the launch of the Fair Fees campaign, tens of thousands of bank customers have downloaded a complaint letter to challenge their banks to refund unfair penalty fees. “We encourage consumers who are unhappy with fees they’ve been charged to challenge them by contacting their bank by phone or using our standard form letter.”
Download the consumer action letter from our campaigns page