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05-266 ASIC reviews transaction fee disclosure
Mr Jeffrey Lucy, Chairman of the Australian Securities and Investments Commission (ASIC) today reported on disclosure of transaction fees by banks, building societies and credit unions.
The report, Good transaction fee disclosure – An ASIC report, follows the release of ASIC’s Guide to Good Transaction Fee Disclosure for Bank, Building Society and Credit Union Deposit and Payments Products (Transaction Accounts) issued in June 2002.
The ASIC guide sets out principles of good disclosure for the five key areas where ASIC believes transaction fee disclosure is particularly important. These are:
- when a consumer is selecting a product or product provider;
- when changes are made to the level of fees or to the details around when, why or how they are charged;
- when a statement is received;
- when a consumer is actively seeking information; and
- immediately prior to making a transaction.
‘ASIC is very keen to ensure that consumers are fully aware of the fees they will incur in their everyday banking’, Mr Lucy said.
‘Account fee structures are designed so that some ways of transacting are cheaper than others. While transaction accounts are often considered ‘basic’ or ‘easy to understand’, we should not lose sight of the fact that consumers still need simple and clear information about what fees they incur, when and how they will incur those fees.’
The ASIC report reveals that improvements have been made to the information on fees in statements to consumers.
‘The guide promotes the use of fee summaries on transaction account statements, and we encourage all institutions to think about using fee summaries’, Mr Lucy said.
Better fee disclosure on statements was the most popular reform identified by ASIC’s consumer research.
The report also considers the issue of ‘real time’ disclosure of fees, that is, where fee information is given to consumers immediately before they make a transaction.
Most institutions reported to ASIC little or no progress towards real time disclosure, in particular in relation to ATM transaction. ASIC accepts that this situation is primarily because they are awaiting the outcome of Payments System reforms, overseen by the Reserve Bank of Australia, before committing to their own systems changes.
‘ASIC urges all financial institutions to continue to seek improvements to transaction fee disclosure’, Mr Lucy said.
‘While some of the requirements about disclosure of fees have changed since ASIC released its guide, the underlying importance of clear, prominent and timely disclosure remains strong’, Mr Lucy said.
Better disclosure also means that consumers are likely to be less surprised about fees that can apply when certain payments and payment instructions are dishonoured.
‘These dishonour fees can be quite high and can result in a consumer’s account becoming overdrawn. Given their impact, it is essential that these fees are clearly disclosed, including their amount and the circumstances in which they are charged, both at the time of opening the account and when these fees are charged. ASIC believes more needs to be done to improve consumers’ understanding of these fees.’
Mr Lucy also reminded consumers about the things they can do to manage their fees.
‘We encourage consumers to keep track of the fees they are being charged on their existing account(s) and to choose new accounts carefully. Consumers should always ask questions if the information they are given is unclear’, Mr Lucy said.
‘Consumers should also let their institution know if they feel it isn’t adequately telling them about the fees they incur’, he said.
ASIC’s consumer website FIDO provides tips for keeping fees down, including:
- carefully check fees before you choose an account so you don’t get locked into an unsuitable account – shop around and compare products before you choose;
- when you get a letter about fee changes, read it carefully and consider exactly what has changed. Then think about the impact these changes will have on the way you prefer to deposit and pay money;
- use your account statement to see what fees you’ve been charged and whether you should change your habits or account. A good fees statement will list each type of transaction you have made. The statement should also list the number of each type of transaction and the cost for each type of transaction; and
- be aware of the fees charged for using an ATM that does not belong to your account institution, often referred to as ‘foreign’ ATM transactions. Some ATMs have notices warning consumers they may be charged a foreign ATM fee so check for such notices before you use the ATM.
A copy of Good transaction fee disclosure – An ASIC report is available from the
ASIC website at www.asic.gov.au or by calling the ASIC Infoline on 1300 300 630.
End of release
Download a copy of:
- Good transaction fee disclosure – An ASIC report
- Guide to Good Transaction Fee Disclosure for Bank, Building Society and Credit Union Deposit and Payments Products (Transaction Accounts)