As the ANZ folded last week to pressure on penalty fees, it brings up a question. How dependent are Australia's banks on fees and charges, and how long could they avoid going under if they could no longer charge these fees, and up them at will?
Have you been caught in the ANZ money trap?
I was an angry victim of ANZ's penalty fees just last Christmas.
I have been caught several times with a $40 penalty fee from ANZ. Often these fees were subtracted on the same day that new funds hit my account, and on some of these occasions I believe that the bank had these funds for several days before declaring them. A double ripoff you might say.
But when on Holidays last Christmas I overdrew my account on a EFTPOS card by less than three hundred dollars.
The ANZ charged me over $40.00 for each time I made a draw. The first charge was on an overdraw of less than $10!
This overdrawn amount included the $120 or so "Honour fees". This meant that they charged me nearly 100% interest for a few days! The mind boggles at the actual interest charged on a per annum basis, but it would have been in the Tens of thousands percent interest annualised. As you can imagine I was not well pleased.
How I struck back at the ANZ.
When I rang the bank I pointed out this practice as wrong and I believed unlawful.
The bank officer reminded me that I had "Signed a contract" with the terms and conditions, and that I was stuck with the charges, and that it was therefore legal.
I then pointed out that any contract had to be fair and reasonable, and this obviously was neither, and therefore where I had agreed with the terms and conditions or not, it was unlawful, as it did not meet this implied condition.
I pointed out that they were entitled to charge an default interest in the order of 4% per annum, which is fair and reasonable, and that this would amount to only a few cents. Their charges i said amounted to several thousand percent per annum, and this was I believed predatory interest.
I also pointed out that I had signed nothing. I was given a booklet with the terms and conditions in then, after I signed up for a bank account, and that these charges were not clearly explained to me.
I also pointed out that I was under the impression, and had asked the bank not to allow any overdrawn amount, and because they did, it was their fault not mine, and that had a duty to me to inform me that the amount would be overdrawn and incur penalty rates if I proceeded, and this did not happen. As I had several bank accounts with clear funds in them I could have used another card.
After initially arguing with me they quickly capitulated under the weight of seeming legal argument. I received a reversal of all three honour fees.
One hundred and twenty dollars tax free for five minutes on the phone, I feel was a good investment of time.
In a move that will cost it about $140 million a year, the ANZ abolished 27 fees on personal accounts and cut other account, credit card and loan fees.
I must not have been the only person to complain, and obviously the ANZ was not the only bank to charge these fees.
But I kind of like to think that I was part of the momentum that caused this charge of heart by the ANZ.
If you were one of the ANZ customers who complained as well, thank you. We did a good thing, and saved millions from a nasty surprise.
So will the banks really go broke if they did not charge fees. Of course not. They make billions a years. But they did lose a little icing off the cake.
The ANZ bank and in fact all Australian banks are great services that we cannot live without. They are full of honest and good people. But if you let them they will try it on. Don't let them even think they can with your account.
Plus, all fees will be abolished for accounts of customers on government benefits who have an Access Basic account. If that's you, tell your bank today, and save even more.
Author: Rick Adlam Mr Mortgage
