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BBC NEWS | Business | Bank charges attacked around the world
Bank charges attacked around the world
Bank customers in numerous countries around the world have been complaining about the cost of having an account.
The Israeli government has just agreed that the country's central bank should regulate commercial bank charges.
In the UK tens of thousands of people have, successfully, been suing their banks for the return of overdraft charges.
BBC correspondents report from South Africa, the Czech Republic and Australia about the growing consumer revolt.
By Peter Greste, in Johannesburg, South Africa.
A glance at my monthly bank statement is a sobering experience.
Sprinkled amongst the cash withdrawals, the cheque payments, the direct debits and the all too rare deposit is a bewildering array of bank charges.
Among them, there is a cash withdrawal fee of 30 rand - the equivalent of more than four dollars; another for R21 ($3); a cheque service fee of R76 (almost $11); and an overdraft service fee of R17.50 ($2.50) even though I have never overdrawn the account.
In all, it adds up to more than $25 - the equivalent of $300 a year.
A study by the international consulting firm Cap Gemini last month found that South Africa's bank charges are amongst the highest in the world.
The study has been widely criticised by the banking industry which says comparisons with other countries are both unrealistic and unfair.
But Keith Weeks from the South African Competition Commission, which has been holding an inquiry into bank charges, said that however you do the sums, the costs of banking here are "very expensive".
Banking the un-banked
The Commission is nearing the end of its enquiry.
But consumer groups like the Financial Sector Campaign Coalition have been pushing hard for greater government intervention to force banks to come up with cheaper, more inclusive fee structures that don't shut out the country's vast under-class.
Campaign organiser Tshepo Nkwe accused the country's big four banks of using their virtual monopoly to shut out new competition and develop complex products that confuse relatively uneducated consumers.
"This is not just about (bank's) profits but about accessibility," he said.
"Right now, there is a huge sector of society that has no physical access to banks, and couldn't afford them even if they did."
It is a problem that the banks themselves acknowledge.
The General Manager of Products and Pricing at the ABSA bank, Keith McGiver, said they are in line with the government's objectives to "bank the un-banked", and draw in those who work in the informal economy.
"If we can make this process more transparent and inclusive, then we think that's a real win," he said.
But he also agreed that while there was a real need to reform the system to reduce charges, he argued that banks are constantly working to develop new products, such as cell phone banking, that are cheap by any standards.
By Rob Cameron, in Prague, Czech Republic.
In the Czech Republic, banking is booming.
Some 29 of the country's 37 banks are now foreign-owned, with big names from western Europe dominating the market.
But critics say those same banks are riding roughshod over Czech customers; doing things they wouldn't dare do to clients in countries further west.
In May, a court ruled that account charges levied by CSOB - which is owned by Belgium's KBC - were not "unjustified", as a group of angry customers had claimed.
The court said the clients had been told about the fees - including charges for closing an account - when they opened the account in the first place.
The case - the first of its kind in the Czech Republic - was filed with help from the consumer rights group SOS, which received 800 complaints and requests for help over banking fees last year.
The group, which says it will appeal against the verdict, wants lower charges and a financial ombudsman.
CSOB and other banks have since stopped charging for closing an account.
The decision, says CSOB, was unrelated to the court case.
Business for money
This correspondent has both British and Czech current accounts, and can attest to the difference.
His (online) British bank levies no charges for everyday transactions.
His (online) Czech bank charges for virtually everything; from 25 euro cents for a cash withdrawal to 15 euros for an annual paper statement.
He is frequently charged an "External Advice Fee" of 13 euro cents, for no apparent reason.
A rip-off? No, say the banks. Different folks, different charges.
Czechs generally have a current account and little else.
And for CSOB's Milan Tomanek, there is simply no such thing as a free lunch.
"As long as financial services remain a business, banking will never be 'free'," he told the BBC.
"Business is for money. Charity is for free."
By Nick Bryant, in Sydney, Australia.
The idea of fairness, or a fair go, is buried deep in the Australian psyche, and recently there's been a public backlash against banks charging exorbitant fees.
Over the past seven years penalty fees have jumped 50%, according to consumer groups who have now joined forces to launch a nationwide "Fair Go On Fees" campaign.
The aim is to prevent financial institutions from charging excessive penalties for an account balance going into the red, late credit card payments or breaking credit limits.
Hopes that increased competition in the financial sector, with the entry of newcomers like Virgin into the Australian market, have been dashed.
Customers are routinely charged 50 Australian dollars (£21) if their balance slips into the red.
"There is no other reason for these fees other than to increase profits," says Indira Naidoo of the consumer lobby, Choice.
"It certainly does not reflect the administrative costs to the bank, which is $A3 or $A4."
More information
Poorer customers are being penalized the most, says Indira Naidoo: low paid workers and pensioners who struggle to juggle their income and expenditure.
"If you are a pensioner and go slightly overdrawn," she says, "you could end up losing a third of your income in banking fees."
According to a study commissioned by the Australian Bankers' Association, their fees put them in the middle of an international league table: below Italy, Germany, France, Sweden and Canada, but above the Netherlands, Finland, Ireland, the UK and USA.
The ABA also claims Australia is below the world average in the cost of retail banking services - the annual cost being 75% of the global average of $A177 per annum.
Following consultations with the financial watchdog, the ABA says that banks will make more information available to customers on exception fees by the end of June.
But ultimately the onus is on the account holders themselves to keep their financial affairs in order.
"Exception fees are avoidable," says David Bell, chief executive of the ABA, "and we would encourage customers to check their account balances if they are not sure of their account balances before making a transaction.
"Banks provide information that helps customers monitor their account balances and keep track of payments," he added.
Story from BBC NEWS:
BBC NEWS | Business | Bank charges attacked around the world
Published: 2007/07/16 23:09:16 GMT
© BBC MMVIII
Bank charges attacked around the world
Bank customers in numerous countries around the world have been complaining about the cost of having an account.
The Israeli government has just agreed that the country's central bank should regulate commercial bank charges.
In the UK tens of thousands of people have, successfully, been suing their banks for the return of overdraft charges.
BBC correspondents report from South Africa, the Czech Republic and Australia about the growing consumer revolt.
By Peter Greste, in Johannesburg, South Africa.
A glance at my monthly bank statement is a sobering experience.
Sprinkled amongst the cash withdrawals, the cheque payments, the direct debits and the all too rare deposit is a bewildering array of bank charges.
Among them, there is a cash withdrawal fee of 30 rand - the equivalent of more than four dollars; another for R21 ($3); a cheque service fee of R76 (almost $11); and an overdraft service fee of R17.50 ($2.50) even though I have never overdrawn the account.
In all, it adds up to more than $25 - the equivalent of $300 a year.
A study by the international consulting firm Cap Gemini last month found that South Africa's bank charges are amongst the highest in the world.
The study has been widely criticised by the banking industry which says comparisons with other countries are both unrealistic and unfair.
But Keith Weeks from the South African Competition Commission, which has been holding an inquiry into bank charges, said that however you do the sums, the costs of banking here are "very expensive".
Banking the un-banked
The Commission is nearing the end of its enquiry.
But consumer groups like the Financial Sector Campaign Coalition have been pushing hard for greater government intervention to force banks to come up with cheaper, more inclusive fee structures that don't shut out the country's vast under-class.
Campaign organiser Tshepo Nkwe accused the country's big four banks of using their virtual monopoly to shut out new competition and develop complex products that confuse relatively uneducated consumers.
"This is not just about (bank's) profits but about accessibility," he said.
"Right now, there is a huge sector of society that has no physical access to banks, and couldn't afford them even if they did."
It is a problem that the banks themselves acknowledge.
The General Manager of Products and Pricing at the ABSA bank, Keith McGiver, said they are in line with the government's objectives to "bank the un-banked", and draw in those who work in the informal economy.
"If we can make this process more transparent and inclusive, then we think that's a real win," he said.
But he also agreed that while there was a real need to reform the system to reduce charges, he argued that banks are constantly working to develop new products, such as cell phone banking, that are cheap by any standards.
By Rob Cameron, in Prague, Czech Republic.
In the Czech Republic, banking is booming.
Some 29 of the country's 37 banks are now foreign-owned, with big names from western Europe dominating the market.
But critics say those same banks are riding roughshod over Czech customers; doing things they wouldn't dare do to clients in countries further west.
In May, a court ruled that account charges levied by CSOB - which is owned by Belgium's KBC - were not "unjustified", as a group of angry customers had claimed.
The court said the clients had been told about the fees - including charges for closing an account - when they opened the account in the first place.
The case - the first of its kind in the Czech Republic - was filed with help from the consumer rights group SOS, which received 800 complaints and requests for help over banking fees last year.
The group, which says it will appeal against the verdict, wants lower charges and a financial ombudsman.
CSOB and other banks have since stopped charging for closing an account.
The decision, says CSOB, was unrelated to the court case.
Business for money
This correspondent has both British and Czech current accounts, and can attest to the difference.
His (online) British bank levies no charges for everyday transactions.
His (online) Czech bank charges for virtually everything; from 25 euro cents for a cash withdrawal to 15 euros for an annual paper statement.
He is frequently charged an "External Advice Fee" of 13 euro cents, for no apparent reason.
A rip-off? No, say the banks. Different folks, different charges.
Czechs generally have a current account and little else.
And for CSOB's Milan Tomanek, there is simply no such thing as a free lunch.
"As long as financial services remain a business, banking will never be 'free'," he told the BBC.
"Business is for money. Charity is for free."
By Nick Bryant, in Sydney, Australia.
The idea of fairness, or a fair go, is buried deep in the Australian psyche, and recently there's been a public backlash against banks charging exorbitant fees.
Over the past seven years penalty fees have jumped 50%, according to consumer groups who have now joined forces to launch a nationwide "Fair Go On Fees" campaign.
The aim is to prevent financial institutions from charging excessive penalties for an account balance going into the red, late credit card payments or breaking credit limits.
Hopes that increased competition in the financial sector, with the entry of newcomers like Virgin into the Australian market, have been dashed.
Customers are routinely charged 50 Australian dollars (£21) if their balance slips into the red.
"There is no other reason for these fees other than to increase profits," says Indira Naidoo of the consumer lobby, Choice.
"It certainly does not reflect the administrative costs to the bank, which is $A3 or $A4."
More information
Poorer customers are being penalized the most, says Indira Naidoo: low paid workers and pensioners who struggle to juggle their income and expenditure.
"If you are a pensioner and go slightly overdrawn," she says, "you could end up losing a third of your income in banking fees."
According to a study commissioned by the Australian Bankers' Association, their fees put them in the middle of an international league table: below Italy, Germany, France, Sweden and Canada, but above the Netherlands, Finland, Ireland, the UK and USA.
The ABA also claims Australia is below the world average in the cost of retail banking services - the annual cost being 75% of the global average of $A177 per annum.
Following consultations with the financial watchdog, the ABA says that banks will make more information available to customers on exception fees by the end of June.
But ultimately the onus is on the account holders themselves to keep their financial affairs in order.
"Exception fees are avoidable," says David Bell, chief executive of the ABA, "and we would encourage customers to check their account balances if they are not sure of their account balances before making a transaction.
"Banks provide information that helps customers monitor their account balances and keep track of payments," he added.
Story from BBC NEWS:
BBC NEWS | Business | Bank charges attacked around the world
Published: 2007/07/16 23:09:16 GMT
© BBC MMVIII
