Penalty fees for cost recovery only!

The Review of the Code of Banking Practice has caved in to the banks, recommending no significant measures to stop banks charging outrageous bank penalty fees…..

“The Review has been conned by the banks into thinking disclosing penalty fees will help families who continue to be slugged by crippling penalty fees of up to $50 a hit,” Family First Leader Senator Steve Fielding said today.

“Banks already say they disclose penalty fees and provide information on how families can avoid then, so the Review has not achieved anything.

“Disclosure does not help cut penalty fees because families do not choose their accounts on the basis of fees they don’t expect to pay. Families cannot negotiate with banks on penalty fees before they sign up for an account – it is take it or leave it.”

The Review reported today and can be found here:

“Given the Review has failed to act on this rorting, banks will continue to charge penalty fees which are up to 92 times the cost of processing the customer’s mistake,” Senator Fielding said.

“Evidence to the Senate Economics Committee inquiry was that banks did not compete with each other on penalty fees.

While banks were able to quote the profit margins they made on interest, they were unable to quote the profit margins they made on penalty fees, which shows there is little competition and therefore little pressure on the banks to cut these outrageous fees back.”

Family First has introduced draft laws that the Rudd Government should take up to protect families from excessive bank penalty fees. Family First’s plan is to stop banks slugging customers with exorbitant bank penalty fees on their accounts and credit cards by ensuring penalty fees are for cost recovery only.

At time of print Wespac shares were down 1.7% as it increased its government-guaranteed US dollar denominated bond issues by $400m bringing the total size to $1.9bn. The ANZ  were down 1.8% and Macquarie Group down 5.6% have already increased their US offering by $100m and $400m respectively.


Categories: GENERAL News