There have been recent moves in the UK by some consumer advocates (notably Martin Lewis) to obtain refunds of fees that they believe have been unfairly or illegally levied in their accounts. For a fairly unusual, but very dramatic, approach read this article where the baliffs actually went into a bank branch (thanks to Stuffem).
This is driven by UK law that fees and charges must be no more than actual cost of the activity being undertaken.
I am not sure of the law in Australia on this point, but some of the fees and charges being levied by the banks do seem excessive ($35 for a returned direct debit?). All banks would have undertaken full ABC (activity based costing) analysis and so would know how much these activities truly cost. Whether the true cost is the average cost or the marginal cost is a point to be debated, but I would like to hear from anyone with knowledge of the law on this point and then see if a test case could be started.
10 comments
11 February, 2007 at 5:07 pm
Bank fees cannot exceed the underlying cost - its the law « The Bankwatch
[...] Source: Bank Fees and Charges « Risk Management in Australia [...]
17 February, 2007 at 3:56 pm
Tobin
This is actually interesting for me as a US citizen. In the United States, banks can charge huge fees and they can charge them multiple times, all before submitting you to a Credit Reporting Agency called ChexSystems. Once they charge these fees and report you, you are basically banned from opening a checking account in most banks in the US for up to 5 years. These banks like to do this because you are then forced to use check cashing establishments that charge as much as 30% to cash a paycheck. Guess who invests heavily in check cashing establishments
People in the US are then forced to find forums such as http://chexvictims.com to help them find a bank that will let them open an account anyway. The whole thing is absurd.
20 February, 2007 at 6:17 pm
ozrisk
Looks like there may be only a few years to go for this problem – see here.
In Australia we have now largely eliminated cheques (sorry, Australians spell it differently) and instead use direct bank transfers. For example, all social security (including unemployment benefit) and other income is paid this way. They are much safer and more secure – but no real help to the unbanked. There are very few without bank accounts, though.
I personally have only banked two cheques in the last 6 months.
29 March, 2007 at 6:21 pm
Kerri
I have never seen any figures on the costs of a failed direct debit but I do find it interesting that if I attempt to withdraw funds from my account through EFTPOS or at and ATM and there are insufficient funds I am likely to be charged a sall transaction fee (varies depending on the bank 50c – 1.50). What is so complex about another party attempting to withdraw funds and being declined for insufficient that increases the cost up to 60 times that of a failed ATM withdrawal for insufficient funds. I can accept that there could be an administration fee charged for setting up a direct debit and an administration fee charged for ending a direct debit but the person seeking the funds oftens hits you with a dishonour or penalty fee for not meeting your obligations what are the banks charging for? The one that astounds me is where you have two accounts linked with the same bank and same branc and you have a regular transfer set up for savings. If the money is not there t be moved from one of your accounts to another of your account (with no obligation to anyone else) you get hit with a $30 dishonour fee.
7 December, 2007 at 1:26 pm
Dave Edwards
For those who might be interested a new service is available at http://www.bankbeaters.com.au which will reclaim your bank fees for the past 6 years.
25 January, 2008 at 10:20 pm
John Curtis
If you wish to get refunds of illegal penalty fees and charges (illegal due to being excessive) AND interest on the refund AND compensation for the Bank’s attempted fraud (trying to deceive you into believing that the fee is legal therefore payable whereas in law it is not lawful and not payable), please see my website for FREE help, it’s probably the best site about the subject, although I do say this myself. And you are most welcome to email me if you have further queries on this matter. Good luck. John Curtis.
25 January, 2008 at 10:23 pm
John Curtis
The name of the website mentioned above is BanksAreThieves.org
29 January, 2008 at 2:32 pm
John PINK
I’ll find out how to establish this sort of E-mail generating system!
you’ve been cut down to one hyperlink – serves you right for being greedy!
30 January, 2008 at 8:34 am
John Curtis
My site, BanksAreThieves.org has this information on Illegal bank fees and charges. The fees for:- 1. Exceeding credit limits and overdrafts 2. Dishonoured direct debits/periodic payments 3. Dishonoured cheques 4. Dishonoured deposited cheques 5. Credit card/loan late payments are illegal due to being excessive. An example of WHY these are viewed in law as excessive is:- You exceed your credit card limit.The bank puts a line of type on your next statement saying “Over limit fee, $35.00″. This line of type has cost the bank maybe 10 cents, which by law it is allowed to recover from the customer. What it is NOT allowed to do is charge you a penalty fee for your error. The precedent on which this law is based is – Dunlop Pneumatic Tyre Co. Ltd. and O’Dea v Allstates Leasing System (WA) Pty. Ltd.
Secondly, all contracts, to be enforceable at law, valid and not void must comply with 6 conditions, one of which is “sufficient certainty of terms”. Now a credit card contract, which usually comprises a letter of offer plus a terms and conditions booklet, almost always states that fees,charges and interest rates can be increased by whatever amount they like whenever they like, and that new fees and charges can be imposed, all without the consent of, and with little or no notice to, the cardholder, does not have “sufficient certainty of terms”. Indeed it has almost NO certainty of terms.
My website has on it my email address and much more information to help you reclaim your illegally imposed penalty fees and charges, plus interest, plus damages. All help given is totally FREE. Good luck. John Curtis.
30 January, 2008 at 10:57 am
Andrew
John,
I think 3 comments pointing users at your (interesting) site are enough. If you have other input I would be glad to have it, but enough on the advertising, please.