Clancy Yeates | SMH | June 22, 2012
Households have spent less on bank fees for the second year in a row, after Canberra’s ban on exit fees helped slice $157 million from banks’ income from home loan fees.
Business customers, on the other hand, have seen their bank fees continue to rise, sparking claims the banks are abusing their power in a less scrutinised part of the market.
The Reserve Bank yesterday said household bank fees dropped by $300 million to $4 billion in 2011, after a $900 million fall in 2010.
In findings that were seized on by the government, the Reserve also said the government’s exit fee ban, which started last year, was a key reason for the drop.
Home loan fee income had grown by an average of more than 10 per cent between 2005 and 2010, but last year it slumped by 11.3 per cent, or $157 million, to $1.24 billion.
”Much of this decline owed to falls in exit fees charged by banks for the early termination of variable-rate mortgages,” the report said. The ban was introduced last July, but many banks removed the fees before then.
Treasurer Wayne Swan said the figures supported the ban on exit fees, which were acting as a ”high-cost straitjacket” that prevented households shopping around.
”Our reforms – particularly banning mortgage exit fees on new loans – mean more money in the pockets of Aussie families and that’s good news for household budgets,” Mr Swan said.
Opposition Treasury spokesman Joe Hockey rejected the claim, pointing to figures showing the banks’ market share of the home loan market was 86 per cent.
”If the removal of exit fees was designed to increase banking competition then it has been a failure,” Mr Hockey said.
”The major banks continue to make record profits and Australians know they will be making up this fee reduction in other areas,” Mr Hockey said.
Aside from exit fees, consumers also spent less on account-keeping fees, establishment fees and break fees for fixed-interest loans.
In contrast, businesses paid an extra $400 million in bank fees, with lenders raising $5.5 billion from their corporate and small business customers.
Australian Chamber of Commerce and Industry director of economics, Greg Evans, called on banks to explain if businesses were subsidising households’ costs.
”The banks have worked out it is easier and they face less scrutiny by increasing the fees attached to business lending than for the households,” he said.