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Spotlight on bank fees



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FINANCE AND PUBLIC ADMINISTRATION

CANBERRA ACT 2600 Tel: (02)6277 4587 Fax: (02)6277 4774

Parliament House

E-mail: EFPA.reps@aph.gov.au http://www.aph.gov.au/house/committee/efpa/

MEDIA NEWS

SPOTLIGHT ON BANK FEES

Banks have increased cheque account fees dramatically over the last eight years, according to a new survey released by the Reserve Bank today.

The figures come from a survey instigated primarily in response to demands by a Parliamentary Committee and present some stark figures, according to the Chairman of the Economics, Finance and Public Administration Committee, David Hawker MP.

The Committee wanted to know whether lower interest rate margins had been offset by banks increasing fees and charges.

Most noticeable from the Reserve Bank o f Australia’s survey of major banks has been the increase in transaction fees over the last eight years. Once in excess of the monthly fee transactions, the withdrawal fees for ATMs (Automatic Teller Machines) have at least doubled: with EFTPOS the increase is 60%, for cheques it is 50%, and for personal service in a bank branch, withdrawing money has seen a staggering increase in costs o f 400%.

More recently, in 1998, the banks’ fee income has grown rapidly in two areas. Fees on housing loans jumped 56%, while for personal (household) transactions the increase was a massive 80%.

The RBA goes on to point out when comparing falling interest rate margins (that is the difference between the Bank’s deposit and lending interest rates) and increasing fees, households are generally better off. The same is not so obvious for small business borrowers.

As the RBA states, on average bank customers have gained from increased competition, particularly household borrowers.

However, depositors with low balances and an above average number of transactions could be worse off. This means some of the most vulnerable in the community could be the most disadvantaged with changing banking charges.

Mr Hawker said he expected the whole question of bank fees would be raised vigorously by members when the Reserve Bank Governor faces the Parliamentary Committee at this Thursday’s public hearing in Melbourne.

Ends 15 June 1999 Further information: David Hawker MP (Chairman) 03 - 5572 1100 (electorate) Beverley Forbes (Secretary) 02 - 6277 4582

Details of hearing and Committee membership follow

Public Hearing Program: Reserve Bank of Australia

Date: Thursday 17 June 1999

Time: 10.00am to 1.00pm

Location: Gardenview/Parkview Rooms Dallas Brooks Convention and Function Centre 300 Albert Street, East Melbourne

Witnesses: Reserve Bank of Australia Mr Ian Macfarlane, Governor Dr Stephen Grenville, Deputy Governor Mr Glenn Stevens, Assistant Governor

Note: Media access to the public hearing room will be available from 8.30am.

Committee Membership

Chairman: Mr David Hawker MP

Deputy Chairman: Mr Gregory Wilton MP

Members: Mr Anthony Albanese MP Mr Mark Latham MP

Ms Anna Burke MP Mr Christopher Pyne Ms Teresa Gambaro MP Hon Alex Somlyay MP Mrs Kay Hull MP Dr Andrew Southcott MP