General News
8 December, 2024
CBA's $3 withdrawal fee is a nasty ploy
Major banks have closed more than 2000 branches since 2017.
Believe it or not, Australia's banks need a "social licence" to operate and should respect their "essential service" status.
Unfortunately, in their pursuit of profits and record share values, this is observed more often in the breach.
The Commonwealth Bank's decision to charge account holders a three-dollar fee to withdraw their own money is the latest in a long line of cynical ploys that have gone down like lead balloons.
It is widely seen as an attempt to reduce teller-facilitated transactions to the point where a case can be made to axe more branches once the closure moratorium ends in 2026.
While the Treasurer claimed a win on the fee after talks with CBA chief executive Matt Comyn on Wednesday, saying the bank had had "a change of heart," that is not correct.
ComBank has only committed to a "pause" in the fee roll-out, saying it will "discuss their options" with affected customers over the next six months.
While we have come a long way since Labor tried to nationalise the banks in the 1940s, the Australian banking system is more dependent on the goodwill of governments and the largesse of taxpayers than many of its global equivalents.
When the Global Financial Crisis hit, the Rudd government reacted swiftly. Judging, quite correctly, that the four majors were just "too big to fail," it announced the Australian Government Guarantee Scheme for Large Deposits and Wholesale Funding in October 2008.
This intervention, which could have left taxpayers on the hook for billions of dollars, served two purposes. One was to assist "authorised deposit-taking institutions" (aka banks) in "accessing funding at reasonable cost at a time of considerable turbulence."
The other was to protect deposits. Under the Financial Claims Scheme, the taxpayers guaranteed all deposits of less than $1 million in Australian-owned banks, building societies, credit unions and Australian subsidiaries of foreign banks at no charge to the institutions themselves.
That has to be one of the biggest blank cheques ever written for a single industry in this country's history. And it was all done in less than a month after Lehman Brothers collapsed.
While the deposit guarantee was rolled back in 2010-2011, the Australian taxpayer still underwrites all deposits of less than $250,000. Canny investors, with more than that to deposit, habitually break their holdings down into sums that come in under the cap and spread them out over several banks.
So how have the banks repaid the taxpayers, their funders of last resort and their customer base, for their generosity and loyalty?
The damning findings of the Banking Royal Commission provide one answer. It revealed an arsenal of underhanded and dirty tricks that had no apparent purpose but to bamboozle and overcharge customers routinely blinded by bull dust.
While heads rolled at the time, recent events suggest that, in many ways, it is still business as usual with trailing commissions to mortgage brokers and hidden fees and charges on tap-and-go transactions that cost consumers $1 billion a year.
Another answer is the appalling record of branch closures, which has left hundreds of suburbs and regional centres without access to banking services. Major banks have closed more than 2000 branches across Australia, 800 in rural and remote areas, since 2017.
As Shakespeare said: [ingratitude] is "sharper than a serpent's tooth".
Heads the bank wins, tails the people lose.