The Australian Financial Review may think that a late fee of $35 on a credit card bill is “unobjectionable”, but millions of Australians beg to differ (“An extravagant ANZ judgment”, February 10).
Following the Consumer Action Law Centre and CHOICE campaign on penalty fees from 2007 onwards, consumers demanded refunds of penalty fees.
The class action against ANZ, by providing the opportunity for consumers to band together, has facilitated legal oversight of bank fees.
Ensuring fees only recover the costs incurred by banks makes sense for consumers and the economy. Consumers contribute to competition by choosing goods and services that satisfy their needs. However, there is little competitive pressure on banks to keep fees in check.
Households are “price takers” in the market for bank fees and charges. Consumers do not expect to pay penalty fees when they open their credit card, and shop around based on interest rates. By ensuring the price charged for offering a credit card is upfront and not hidden, consumers will choose the package that best suits them. The resulting competition can then drive efficiency.Author: Gerard Brody
Source: Australian Financial Review.Consumer Action Law Centre, Melbourne, Vic