I first became aware of what I call the ‘scourge of bank fees’ in 1988. As a 23-year-old living and working in Perth, I’d opened an account with Challenge Bank, and was using it to deposit my pay and for everyday transactions.
These were the days of paper bank statements being delivered by post and when my statement arrived one afternoon, I ripped open the envelope and scanned the page. To my surprise I noticed that a $2 withdrawal was coming out of my account each month.
Now $2 was not a large amount by any means, even in 1988, but I wanted to know who was behind this outrage. The following day I headed straight to my branch and was told the $2 was an ‘account keeping fee’.
My reply was along the lines of, “So basically you are taking my money and charging me for the privilege.” As a miffed young man I vowed to “take my business elsewhere”. And I did. But what I didn’t realise at the time was that I could run but I couldn’t hide. Before long, virtually every bank was charging some variation of an account-keeping fee.
In the three decades after that, banks and other financial institutions found many innovative ways to take money from customers under opaque names which included the words ‘charges’ and/or ‘fees’.
This reached a climax when the banking royal commission of 2018 found that banks had been engaging in “charging fees without delivering any services”. I had jokingly suggested we were heading to such a point about a decade earlier, but to see banks actually being found guilty of such a practice was still a shock.
The question now is, have things improved as a result of that royal commission? The good news is, the answer to that question is apparently ‘yes’. The bad news is, there are still cases of alleged ‘fees for no service’ being lodged.
According to ASIC head Joseph Lingo, “we do continue to have cases where fees for no service are being alleged.” Speaking to an senate estimate committee last week, Mr Lingo said, “We continue to investigate [these cases] and take court action where it is appropriate.”
The wheels of justice turn slowly it seems. One of the problems is that the maximum penalty for such breaches is $2.1 million. That’s a lot of money to you and me, but to the big four Aussie banks, it’s a proverbial slap on the wrist.
When it comes to excessive fees, it seems Australia is heading in the right direction, but customer vigilance is still very much recommended.
Have you noticed a reduction in your financial fees since the royal commission? Do you think banks are doing enough?
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