Chapter 24:         BANK FEES AND BANK CHARGES’ REFORM:


 

MOTION: That the Rudd Government immediately seek to empower the relevant government watch-dog bodies to be able to review banks’ fees and charges and to ensure that such fees are actually competitive.

Rationale:

As to how CEOs of the major banks can escape proper scrutiny vis-à-vis their unscrupulous fees and charges is a mystery to virtually all Australians.

Now ex-Treasurer Costello, never understood the need to smack the banks’ overpaid CEO bums to bring their outrageous fees and charges into line with “A Fair Go” and the tenets of Competition Policy? Why? Costello was forever raving on about inflationary pressures derived from inefficient employment practises, inefficient industrial and commercial practises as well as dishonourable cartel behaviour. Never-the-less Howard & Co failed most egregiously, to take on the banks on behalf of the people. Costello as PM would have been tarred with the brush of the past decade. Will Wayne Swan as the current Treasurer align himself with the OZ Political Status Quo Coat of Arms with the vision of the three politically wise monkeys as their motto? “Speak no evil, see no evil and hear no evil” other than the selective crocodile tear evils of their political foes?

As to how the typically indiscriminate $30 Overdraft Approval Fee (OAF) could be considered not to be inflationary, or would not be tantamount to de facto cartel behaviour is very strange indeed. Some of the banks charge $45 or so for a direct debit that bounces due to “Insufficient Funds” being available at the time concerned. If our Pollies and our economics’ commentators believe that the banks are justified in charging $45 for a computerised message minus an actual funds transfer, is worth $45 then they are living proof that Orwell was correct. Truth is lies. Lies are truth. Punitive bank fees and charges are justified charges!

Please explain Mr Costello, or Mr Swan, how a $30 fee for a $15 overdraft for 5 days is either fair or a sign of competition at work? Not only that, but invariably, additional monthly or quarterly or annual charges are also applied typically. But to keep it simple, let’s consider the prima facie costs. if the bank’s short term money supply were to cost the bank 20% per annum, which it doesn’t, then the interest cost to the bank would be 20/100 x 5/365 x 1500c which equals approximately 4.1 cents. How can the $30 OAF be justified in terms of Competition Policy, or economic rationalism? Does Mr Swan, as do some idiot economics’ commentators do, subscribe to the proposition that “The fee is simply a justifiable charge”? If so, then why would it be so? Huh? What is the justification? CEOs need to skim the accounts of large numbers of customers to justify collecting $mega-million salary packages? How could the OAF be deemed to be anything other than price gouging? Huh? Come on? Give OZ the good oil instead of the bad oil. No? But then the little people whom our Pollies are supposed to represent, aren’t interested in helping out the little people in our society, are they?

Check out the following article relating to U.K. banks and a class action to recover excessive fees charged by British banks.

http://news.independent.co.uk/business/news/article2305507.ece

The banks’ unconscionable fees for tiny overdrafts and direct debit bounce messages have no correlation with the actual cost of providing the service. The fees seem to be a hangover from the days when paper cheques and bouncy-bouncy messages were mailed to and fro and the poor old bank tellers had a lot more paperwork to do. The “refer to sender” messages that went out in the mail may have come close to justifying the charge, but it would not come close today. The $30 overdraft Approval Fee today is much more of a heist similar to what might occur if supermarkets were allowed to charge hundreds of times the wholesale price for a loaf of bread, or a litre of milk, on the grounds that all other supermarkets charged similar amounts. Yet our corporate watch dogs and both major parties allow the banks to get away with it, with endless impunity. Why would that be so? Could it be that the banks make substantial donations to the coffers of the major parties by any chance? Yes? Could it be due to an absence democracy by any chance? Yes. If the Rudd Government’s inquiry into supermarket prices were to be extended to include banking fees and charges, then they might begin to be doing what’s actually “In the National Interest”.

If the Rudd Government’s pre-election offer of “New Leadership” means anything other than more of the same undemocratic government, whereby the wishes of the people are ignored, then an historical opportunity to prove it by enforcing competition policy arises. If petrol pricing is fair game for an inquiry, then why aren’t banking fees and charges similarly ripe for an inquiry? To date, competition policy has been applied selectively, or applied as a dummy, or not applied at all. Mostly the banks fall into the latter category.

In the context of the Sub-Prime Mortgage meltdown in the US, Brendon Nelson OL recently declared in effect that there would be “Nothing worse than having banks making a loss”! That may be so if the bankruptcy of a bank were imminent. But that is hardly the case where banks today manage to find ways of ripping off both customers and shareholders, so that CEOs can justify their salary packages. If Brendon would like to win the next election then he could promise to apply actual competition policy to the banks. Ho? Ho? What are the chances of that occurring? Ho? Ho? Ho?

Consider the Commonwealth Bank’s advertising where they promise to be “Determined to be different”. What does that mean? Rather than being thieving bastards, they will be nice thieves from now on?  Does it mean that their BS fees and punitive fees will be lowered in accordance with the actual cost of providing the service? Not likely! Does it mean that the CEO will knock back an annual salary package if it exceeds say, $30M? Would such a CEO sacrifice salary and perks to be able to offer fair and just fees and charges that reflect the actual cost of delivery, free of punitive aspects? Or will the unfair, unjust, non-competitive rip-offs that pay for the CEO’s outrageous take home pay, that our politicians admire and envy so much, continue remorselessly? Ho! Ho! Ho! You betcha!

 

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