Government Considers Banning Bank Exit Fees

Bank exit fees in the firing line The Federal Government is considering banning bank ‘exit fees’ to help borrowers frustrated by the failure of lenders to pass on interest-rate cuts. Cabinet sources report that the Government is furious at the banks’ refusal to pass on the most recent 0.25 per cent cut in full, accusing them of ‘hijacking’ monetary policy as the Reserve Bank tries to free up cash in the economy. Assistant Treasurer Chris Bowen said he was seriously considering including punitive bank exit fees in a banned list covering unfair contracts. They would be part of a bill Mr Bowen plans to bring to Parliament in June. Draft legislation will be published next month. You can read the full Bank Exit Fees story here. We say “Bring it on, Chris!” Allowing other banks to refuse to follow the direction taken by the Reserve Bank is poor fiduciary policy; and we can think of no other industry that exploits Australia’s competition policy by charging exorbitant exit fees to stop dissatisfied clients leaving. The effect of this most recent grab for cash by the major banks will do nothing to support Australia’s SME’s – their bottom line will continue to be savaged by both clients’ and customers’ continuing lack of disposal income and the increased overheads that follow in the tail of bank’s refusal to cut interest rates.