That pesky UK regulator, the Office of Fair Trading, has been at it again, threatening to report the banks to the Competition Commission after exposing the way they rip off customers through cheque account fees.
In the process, the OFT has also embarrassed the impotent performance of the various Australian regulators who have run away from any responsibility for abusive bank fees. Well, it would have embarrassed them if they actually cared about it instead of happily buck-passing the issue.
Crikey subscribers will recall the fine job done by the OFT in confirming bank penalty fees were legally unenforceable while the ACCC/ASIC/APRA/RBA/RSPCA continue to ignore it.
Now their target is the 8.3 billion quid British current account industry which “is not serving customers well”, as the OFT says with some typical British understatement.
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The British banks run their current accounts in much the same way as their Australian cousins. The major difference is that Australian bank fees are effectively unregulated from a consumer protection point of view with none of the alleged watchdogs taking responsibility.
Ditto federal governments of both colours. Only Family First’s Senator Steve Fielding has tried to rein in some the banks’ more outrageous customer abuse with a private member’s bill and inquiry.
It is an unfortunate reality that this is not a convenient time to be attacking the banks’ fee gouge. The international credit crisis means the financial system needs them to maintain their profits — however dubious their source. With the maintenance of dividend levels an absolute priority right now, don’t expect any bank to start behaving more ethically.
NAB’s Australian chief Ahmed Fahour told me last year that, having reduced some of its cheque account penalty fees, the bank would do something about the egregious credit card penalty payments “early in 2008”. It’s no longer early 2008 and nothing’s happened. I don’t expect it will.
The time for government to act on behalf of consumers was during the one-and-a-half decades of easy money, when bankers couldn’t help but make ever-greater profits and pay their CEOs ever more millions for not doing much.
That time will come again. When the credit crisis eventually eases, Australia’s banks are set to power out of the slow down having burnt off their non-bank opposition and secured their oligopoly. They need to be put on notice now. Perhaps we should outsource the job to the OFT.