Nab Cuts Penalty Charges For New Account

Sydney Morning Herald

Wednesday September 5, 2007

Jacob Saulwick

A CAMPAIGN to cut bank penalty fees has had another victory, with the country's second-largest bank announcing it will offer customers a bank account free of penalty fees and reduce a range of other charges.

Consumer groups praised the move by NAB, which comes a week after ANZ said it would cut credit card penalties for low-income earners, but said banks needed to make deeper cuts to make "exception" fees equitable.

The co-chief executive officer of the Consumer Action Law Centre, Catriona Lowe, said NAB's move raised the question of when other banks such as Westpac, St George and Commonwealth would cut similar fees.

"The move by the ANZ last week and the NAB now are significant steps by two of our biggest banks acknowledging these fees are not sustainable and they are clearly not popular with customers. That's now being reflected in the sorts of offerings being made," she said.

Penalty fees - which have risen by about 10 per cent a year since 2002 - far outweigh what it costs a bank when customers dishonour cheques, exceed card limits, or have insufficient funds to cover direct debit transfers, critics say.

They have drawn the ire of consumer groups and politicians who have been agitating for governments to cap the so-called exception fees.

NAB's move - which establishes the first bank account available to the general public without exception charges (for a $6 monthly service fee) - precedes an expected public hearing into bank fees, overseen by a parliamentary economics committee.

NAB will also bring its dishonour fee into line with the majority of other banks, dropping the charge from $50 to $30 in early 2008.

And from November the bank will remove the $25 over-limit fee it charges on its credit cards used by customers with a NAB concession card account.

The Family First senator Steve Fielding said the Australian Securities and Investment Commission should be given powers to regulate the fees.

"I welcome [the] announcement by the NAB, but really these are token gestures and far too late. They don't change the fact that banks are still charging penalty fees way over what it costs them," Senator Fielding said.

Westpac and Commonwealth Bank both said they had no immediate plans to offer a general fee-free account.

© 2007 Sydney Morning Herald

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