More ammunition for the gathering class action against Australian banks over fees, especially exception fees, with the Reserve Bank today issuing its 2009 survey of banking fees.

The survey covered 18 institutions, which the RBA said account for about 90% of the total assets of the Australian banking sector.

“For those banks participating in the survey, total domestic fee income grew by 9% in 2009 to $12.7 billion, with fee income from businesses growing much faster than fee income from households.

“As has been the case since 2002, growth in fee income was slower than the growth in banks’ balance sheet assets.

“Consequently, the ratio of fee income to assets has continued to decline.”

The bank said that income from exception fees, which are charged by a bank when a customer breaches the terms of a banking product — typically by making a late payment, overdrawing a deposit account or exceeding a credit limit — was little changed at $1.2 billion in 2009. (Although that should be lower this year as most banks have either reduced, eliminated or altered how these controversial fees are charged and paid).

The RBA said that more than half the fees were paid by business, up 13% in 2009 to $7.6 billion.

“As was the case in 2008, most of the growth in business fee income resulted from growth in fees from loans and bank bill facilities, while fees on business deposit accounts were little changed.”

Fees paid by households rose 3% to $5 billion in 2009, which was the slowest rate of growth since the survey was started by the RBA in 1997.

The RBA said, however, that was not the full picture: with “strong growth in housing loan fee income partially offset by a decline in deposit account fees. Fee income from housing loans increased by 17% in 2009, much higher than the average annual growth of 7% recorded between 2003 and 2008, and broadly in line with growth in housing lending.

“Fee income from personal loans grew by 14%, which is attributable to both an increase in account-servicing fees and an increase in exception fees .

“Credit card fee income increased by 8% in 2009, well below the average annual growth of 17% over recent years. Within total credit card fees, other fees (mainly exception fees) grew most strongly at 10%, consistent with growth in the value of non-performing credit card loans over the year .

“Account-servicing fees rose by 5%, driven by a slight increase in the number of cards and an increase in the annual fees on no-frills cards. Credit card transaction fees (such as cash advance fees) also grew by 4%.”

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Peter Fray
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