21 May 2009

Banks rake in $11 billion in fees


Australia's banks, which have been labeled the world’s most expensive, earned more than $11 billion in fees from customers last year, according to the Reserve Bank of Australia (RBA).

The RBA said the 18 banks included, which represent around 90 percent of the banking sector, raked in $11.6 billion in fees in 2008, an increase of $885 million in one year.

The banks charged households $4.8 billion in fees, while businesses were hit with $6.7 billion in fees.

For the first time, the RBA tracked ‘exception fees’ in its analysis. Exception fees are the charges that banks levy when a customer breaches the terms of a product - such as making a late payment or exceeding a credit limit.

The RBA found that banks charged customers $1.2 billion in exception fees - with the majority of charges relating to credit card and deposit accounts.

While the RBA data analysed 18 banks, it is believed that around half of the $11 billion charged in fees is attributable to the big four banks.

A report from Fujitsu Consulting released in March found that Australia's big four banks are among the most expensive in the world and revealed they will collect more than $5 billion in fees in the year ahead.

"We have some of the most expensive banking services in the western world," Fujitsu Consulting's Martin North said.

He added that while it was impossible to benchmark Australian fees against every country in the western world, they were probably the highest. "There are no countries that I've found that have higher fees," Mr North told ninemsn.

The research concluded that the average Australian household pays close to $1000 in fees each year, compared to $850 in the US and $749 in the UK.

According to Mr North, a lack of competition in the Australian market is allowing the banks to charge such large fees. He added that bank fees are not accurately alligned to the actual cost of the service.

Australian banks charge around 300 different fees.

money.ninemsn.com 21 May 2009

No comments:

Post a Comment