Banks charge high fees 'simply because they can'
Australia’s banks and financial institutions charge high "exception" fees and mortgage exits fees "simply because they can", it has been argued.
John Collett, a finance columnist for the Sydney Morning Herald, noted that since the onset of the global financial crisis there has been "a massive transfer of wealth from consumers to the banks" that has enabled them to charge the fee levels they want.
He observed that the banks’ claim that rising fees are necessary to recover higher funding costs will soon be tested in a huge class action to recover exception fees on overdrawn accounts and credit cards.
Mr Collet said the banks had already been undermined in their attempts to use the same defence when raising home loan rates above the official cash rate.
"The Reserve Bank put paid to that argument in its March bulletin when it said that for the major banks, the increases in lending rates had more than fully offset their higher funding costs," he added.
Mr Collett’s comments may encourage more consumers to compare credit cards ahead of the class action findings. This week, a survey by Galaxy found that 59 per cent of voters want to see an extra levy on giant bank profits similar to the government’s proposal for a tax on mining companies.
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