News Service from House Harris

NAB first big bank to axe overdrawn fees for personal accounts

SYDNEY, July 29 AAP - National Australia Bank Ltd is the first of the big local banks to abolish overdrawn account fees, which contribute to about $1.2 billion in annual fee revenue for the banking sector.

Consumer groups applauded the move on Wednesday, as other major banks said they were considering following suit.

NAB will axe a $30 overdrawn charge from all of its personal savings accounts and personal transaction accounts from October 1 following a raft of complaints from customers.

The move is aimed at giving the bank a competitive edge and improving relationships with customers, NAB chief executive Cameron Clyne said.

"The customer clearly doesn't think the fee is fair and it's demotivating for our staff to spend time dealing with it," Mr Clyne told reporters.

Banks have come under fire over their penalty fees since the Reserve Bank of Australia revealed they reaped about $1.2 billion - or 10 per cent - of their total revenue from "exception fees", which include overdrawn fees, in 2007/08.

Households bear the brunt of exception fees and paid $961 million during the year, mainly for transgressions on deposit and credit card accounts.

NAB's major rivals said on Wednesday they were also thinking about axing some penalties.

Commonwealth Bank of Australia Ltd (CBA) said it was about to announce a significant reduction in fees in this area.

ANZ Banking Group Ltd said it was aware of customer concern about fees for overdrawn accounts and was examining options, while Westpac Banking Corp said it had been reviewing its fee structure for some time.

"A lot of our work has been done quietly, but we will continue to make changes where appropriate to reflect our customer strategy," a Westpac spokesperson said.

NAB said overdrawn fees affect around 700,000 NAB personal transaction or savings account customers every year in Australia.

Mr Clyne said abolishing the fee would impact the bank but it would not seek to recoup the shortfall anywhere else.

"The financial impact we think would probably be about $100 million [to the bottom line]," he said.

Financial research and ratings firm CANSTAR CANNEX said more banks were likely to follow suit as they had been struggling with negative publicity over penalty fees for customers who go "into the red".

"The move by NAB to axe this fee is a step in the right direction and we expect more banks to follow suit," CANSTAR CANNEX financial analyst Peter Arnold said.

"Many credit unions and building societies give you a period of grace, say 5 days, to rectify the error and they seem to charge a fee only as a last resort."

Prime Minister Kevin Rudd said it was good that one of the banks was starting "to do the right thing".

"But you know something, there is a long, long way still to go in terms of what banks are doing for their customers," Mr Rudd told reporters in Adelaide.

Consumer groups, including CHOICE campaign and policy director Gordon Renouf, were pleased at NAB's announcement.

"(But) we still need the other banks to scrap these unfair fees," Mr Renouf said.

Consumer Action Law Centre said ANZ was now the only major bank charging these fees on its concession accounts to the most disadvantaged consumers.

"It's clearly time for ANZ to stop its fee gouge of its most vulnerable customers," Consumer Action policy and campaigns director Nicole Rich said.

ANZ charges concession card holders who have an ANZ Access Basic account an overdrawn fee $10, while its other customers pay $35.

The consumer advocates said that since they launched a Fair Fees campaign two years ago tens of thousands of bank customers have downloaded a complaint letter to challenge their banks to refund unfair penalty fees.

The other banks' overdrawn charges are currently: CBA $30-35, ANZ $35, Westpac $40, St George $38-$45. There are some exemptions.