National Australia Bank Ltd (NAB) chief executive Cameron Clyne says the bank’s decision to abolish penalty and other exception fees on some of its accounts has started to improve the bank’s reputation.

But Mr Clyne said the negative perception of NAB was the result of the bank’s past actions and there was a long way to go to improve its image.

Mr Clyne also said there needed to be debate in Australia about how to become less reliant on offshore funding, something he described as the great weakness of the economy.

“One of the goals I set for myself was improving the reputation of the bank,” Mr Clyne said at an Australia-Israel Chamber of Commerce lunch on Monday.

“The first thing we set out to do was deal with fees.
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photo credit: Medmoiselle TThe battle over bank fees is set to flare once again with a new bill before the federal parliament.

The senate economics legislation committee is accepting submissions on the Trade Practices Amendment (Australian Consumer Law) Bill 2009, a draft law aimed at voiding any consumer contract if the terms are deemed unfair.

“That bill would regulate unfair contract terms, which some commentators have pointed out would potentially cover terms in contracts that impose unfair penalty fees,” said Nicole Rich, policy director at the Melbourne based Consumer Action Law Center (CALC).

“But the legislation hasn’t gone through yet and I suspect that the banks will argue against it quite vigorously at the senate hearing.”
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The Commonwealth Bank of Australia (CBA) announced yesterday to it’s wider broker community that effective from June 1, 2009 the Rate Lock fee will almost double from $395 to $750.

According to the CBA communication to it’s brokers, the cost of providing the Rate Lock has increased significantly due to the increased market volatility around interest rates and that the increase of the fee is a way to recover the extra costs that they are incurring.

The Rate Lock option is available to customers to protect them from the risk of interest movements during the application stage and protects them from upwards movements in the rates for a period of up to 90 days.
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Australian banks charged customers nearly $1 billion in penalty fees last financial year and consumer groups say the charges are unfair and unethical.

Bank fees from households rose by eight per cent to $4.9 billion in the 2007/08 financial year, says a report by the Reserve Bank of Australia (RBA) released early this week.

The report says $961 million, or 20 per cent, of total bank fees, came from “exception fees”, - a banking term for penalties on late payments or overdrawn accounts.

Customers face charges of between $35 to $50 for over drawing their accounts or paying their credit card bills late, Melbourne based Consumer Action Law Centre (CALC) said.
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Greater use of banking services, rather than higher charges, was behind the $11.6 billion in fees collected by commercial banks in 2007/08, a Reserve Bank of Australia (RBA) report says.

An annual survey from the RBA found the amount commercial banks earned from fees rose by $885 million, or eight per cent, in the 2008 financial year, a similar outcome compared to the previous year.

Households handed over about $4.9 billion in fees, due mainly to deposit accounts, credit cards and housing loan charges, with businesses responsible for the other $6.7 billion, the report found.

The RBA said the increase in fee income was slower than the growth in banks’ balance sheet assets.
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Off the back of Prime Minister Kevin Rudd’s statement that banks should cut fees Executive General Manager, Fujitsu Consulting, Martin North told Lending Central that banks could reduce costs by 20% to 40% simply by addressing their “extreme inefficiencies”.

North, who is responsible for a recent survey that shows that Australians pay an average 22% more on fees than British households and 11% more than Americans, says that the high fees are a product of the prevailing attitude that puts profit ahead of service.

He maintains that the way to force banks to start putting the needs of their customers ahead of profit is through the groundswell of “people power”.
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A customer backlash has forced Westpac and St George Bank to backflip on charging a disloyalty fee to customers using other banks’ automatic teller machines (ATM).

The two banks join the ANZ Banking Group in dropping the unpopular fee.

Westpac and St George said they would drop the 25 cent fee applied to their customers when they used another financial institution’s ATM.
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Australians pay the western world’s highest banking fees, a new report says, and the opposition claims the government’s doing nothing about it.

Australians cop fees that are 22 per cent higher than those paid by Britons, and 11 per cent higher than what Americans pay, says the report released on Thursday.

The opposition says the federal government has failed to pressure banks to drop their charges.
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Commonwealth Bank of Australia (CBA) subsidiary, BankWest, is charging its customers a 50 cent disloyalty fee when they use another financial institution’s automatic teller machine (ATM) under the new-direct charge fee regime.

BankWest spokesman Adrian Bradley said the fee applied to all products except Zero Account, and would not apply when customers used CBA ATMs.

“The fee was set in relation to the costs we’re incurring,” he said.
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The latest Canstar Cannex packaged home loan star ratings has listed the Commonwealth Bank of Australia (CBA) as the number one home loan deal in the country with a mortgage rate of 6.04% despite the loan’s huge annual fees of $350.

It has been revealed today that online home loan lender MyRate.com.au is not only offering a cheaper interest rate than the leading star-rated lenders - but it is doing so without the heavy annual fee or any upfront fees on standard applications.
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The Reserve Bank of Australia (RBA) will require automatic teller machine (ATM) operators to show customers their fees for a withdrawal, as part of changes it hopes will increase competition.

In changes that take effect on March 3, ATM owners will be allowed to charge customers a fee directly for the use of their machine, as long as they show how much they charge before the withdrawal goes ahead, according to an RBA statement on Wednesday.
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Consumer groups are demanding the Commonwealth Bank and ANZ stop slugging low-income earners with unfair penalty fees on concession accounts.

Both banks charge penalty fees on the accounts, also known as basic bank accounts, the Australian Consumers Association (CHOICE) and Consumer Action say.

The accounts offer reduced-fee banking to recipients of government benefits, including pensioners and concession card holders.
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