BANKS GOUGING FEE’S IN A RECESSION

The figures reveal that households and businesses paid $1.16 billion in exception fees in 2008, with households making up the bulk of the number.

Households paid $415 million in exception fees on credit cards, mostly for late repayments, and $490 million for breaching the terms of deposit accounts. Customers paid $38 million in exception fees on home loans.

There are no comparable figures for previous years, but the Reserve Bank numbers reveal all fees on credit cards climbed 11 per cent last year. Overall, households paid an extra $362 million in fees in 2008, taking the total to $4.85 billion. About $640 million worth of fees were charged when customers used another bank's ATM.

The Australian Bankers' Association said the Reserve Bank figures showed there was "considerable scope for households to reduce their total fees paid to Australian banks" by changing their behaviour, claiming one third of total fees collected by the banks could be avoided.

"The fees which could be avoided are $954 million worth of exception fees and $640 million worth of foreign ATM fees,” said ABA chief executive David Bell in a statement.

"By using your own bank's ATMs, ensuring accounts are not overdrawn and your credit card paid on time, money can be saved. Avoiding overdrawn fees can be done by checking your account balances before making large purchases.

"The ABA's estimated savings do not include the savings that consumers and households can get by moving to low-cost accounts, such as basic or exception fee-free accounts. If these opportunities are taken into consideration, households, on average, could save a good deal more than 30 per cent.

"The ABA estimates, based on RBA data, show that exception fees have fallen as a percentage of resident assets. And in particular, exception fees on transaction accounts have fallen as a percentage of household deposits."

However, Deputy Prime Minister Julia Gillard today warned the banks that the Government expected them to be competitive on fees and that people should switch banks if they were getting a bad deal.

"We have said to Australians very deliberately that they should shop around, they should put the acid on their bank to offer them the best deal. and if they don't then they should walk to another bank,” Ms Gillard said in Melbourne.

The figures, foreshadowed in The Australian today, reveal that total bank fees are rising at their fastest pace for five years, climbing 8.3 per cent last year. Fees are falling as a percentage of total bank assets but the numbers will still expose the banks to another round of condemnation from the federal Government and consumer groups.

Ms Gillard refused to be drawn on whether the banks were being greedy.

"We have said to the banks in these difficult days, and indeed beyond, we expect them to treat Australians decently and we expect Australians to get the benefit of competitive banking arrangements,” she said.

Asked whether more regulation of bank fees was needed, Ms Gillard said the Government had already introduced changes that make it easier for customers to move between banks. "We obviously want the benefits of competition to flow through the banking sector."

Wayne Swan last month led an attack on the banks, saying they were short-changing customers by refusing to pass on in full the Reserve Bank's 25 basis point cut in interest rates.

"They'll have to justify their position in the court of public opinion," the Treasurer said at the time. "They do need a good kick up the bum occasionally."

Speaking ahead of the release of today's Reserve Bank figures, Family First senator Steve Fielding said the rise in fees proved "the Government does need to step in and regulate this area".
"Giving the banks free rein clearly isn't working and ordinary Australians are paying through the nose," he said.

Additional reporting: Andrew Trounson