Banks including Westpac, ANZ, NAB and Commonwealth failed to offer online credit card cancellations as an option, instead resorting to lengthy "go slow" processes that could take up to five business days, in an effort to deter customers from going through with a card cancellation, a parliamentary inquiry has revealed.
This is in spite of mounting public pressure from consumer groups and the government to offer a simple way to
cancel a credit card around the clock and in real-time.
NAB claimed to offer the functionality in March; however, in responses to
questions asked during the inquiry, the bank clarified its "messaging
service" would still try to get customers on the phone.
"After a customer lodges an online request to cancel their credit card, NAB
will call them as part of the cancellation process.
"If the customer cannot be contacted after two attempts, the card will be
cancelled as directed."
Commissions were paid to the staff of some banks if they could keep
customers from cancelling their credit cards. Commonwealth Bank rewarded
staff for convincing customers to keep their credit cards up until July of
This isn't a practice of NAB and ANZ, as the two banks claimed their
staff incentives were calculated based on a range of metrics.
Westpac's chief executive Brian Hartzer told the inquiry the bank doesn't
offer online cancellations because "we would like to have a conversation"
But the bank's own staff don't deal with credit card cancellations. It
outsources the handling of card cancellations to a third-party specialised
in "retention activity".
Credit cards have come under fire for charging high interest rates and continually rising late payment fees. The average annual cost of a credit card issued by one of the big four banks is $146, more than double the $58 fee charged by mutual or customer-owned banks.
Currently a customer can sign up to a credit card online with approval
often being granted within 20 minutes, but to cancel a credit card
customers to visit a branch, call during set hours or to send a written
request in the mail.
CHOICE raised the issue of allowing customers to cancel a credit card
online in 2015. The Federal government recommended banks offer the service
to customers in a 2016 consultation paper, as did an independent reviewer
appointed by a consortium of banks in 2017.
Only Commonwealth Bank has committed to offering online credit card
cancellations. The bank announced in March its online service will let customers
terminate a credit card in real-time when it launches "later in 2017".