Showing remarkable foresight, or perhaps just underlining the billions of dollars at stake, Australia’s banks nobbled the Banking and Financial Services Ombudsman on the penalty fee issue before that office even started.
The BFSO (and from an acronym point of view, aren’t they lucky to have the FS bit?) won’t look into the thorny issue of outrageous bank penalty fees because it’s not allowed to under its terms of reference.
Guess who set the terms of reference? No, it wasn’t a difficult question. The BFSO was set up and is financed by its member banks. The claim is that the BFSO is free and independent, which is sort of true but not quite when it’s hamstrung by its carefully crafted charter.
The terms of reference do state:
The Ombudsman may consider a dispute about a fee or charge being incorrectly applied by the financial services provider having regard to any scale of charges generally applied by that financial services provider.
Which means as long as the bank charges legally grey penalty fees in line with the legally grey penalty fees it usually charges, the BO isn’t allowed to consider it. Nice.
A BFSO spokesperson told me fees were “a matter of policy for the banks” and thus she thought it would be a matter for the regulator. Which regulator? “I’ve been referring journalists to ASIC.”
Well that’s a waste of time and the cost of a call – ASIC most definitely doesn’t want to have anything to do with it.
Next stop, your state fair trading departments – but I somehow think no smart bank would ever let you get that far.