Excessive Australian bank fees targeted by new laws
18 February 2009
Excessive banks fees targeted by new laws: Article from Herald Sun by Karen Collier
February 18, 2009 12:00am
EXCESSIVE bank fees for overdrawn accounts, late credit card payments or bounced direct debits could be slashed by new laws.
Banks profiteering from home loan customers who switch from fixed to variable rates may also risk court action, fines or demands for refunds.
Some banks charge $35 for late credit card payments, $30 for exceeding a credit card limit, $38 for overdrawn accounts and $45 in direct debit dishonour fees.
Consumers have also complained of massive penalties of several thousand dollars to shift between fixed and variable loans.
The Federal Government wants to axe unreasonable costs and tricky fine print in basic "take it or leave it" contracts such as bank accounts, credit cards, gas and electricity deals, insurance, mobile phones, gym memberships and car hire.
Victoria has unfair contract laws protecting consumers in most fields but not for financial services such as bank accounts or car hire insurance exclusions.
Under national rules brought forward to January 1 next year, unfair clauses that cause or are substantially likely to cause consumer detriment will be banned.
But negotiated contracts will not be covered and consumers will be unable to challenge upfront prices.
Releasing a discussion paper at the Monash Centre for Regulatory Studies yesterday, Federal Consumer Affairs Minister Chris Bowen said banks caught charging excessive penalties that outweighed administrative costs could be scrutinised.
He said unfair fine print included terms that allowed mobile phone companies to automatically extend contracts without customer consent, or companies charging huge penalties for breaking contracts while retaining their right to cancel any time.
Australian Bankers' Association chief David Bell said banks were managing credit in "difficult and uncertain times" and the right balance had to be struck.
But consumer Action Law Centre chief Catriona Lowe said the reforms were critical.
The Australian Competition and Consumer Commission will get extra powers to take civil action businesses using misleading ads and false product claims.