Bank Charges.

For some time we have been trying to resolve whether , as has been speculated by some , there was an agreement , when the Post Office Savings Bank was sold , with the Trading Banks to provide their customers ,who nominated to have their superannuation paid into the bank, a no fees entitlement.

We have had clarification through the good offices of Jim Anderton which is as follows .

The Banking Ombudsman advises that she is not aware of any formal agreement that Banks would not charge superannuitants if their superannuation is paid into an account. In the absence of any legal obligation , banks do not have to offer a superannuitant fee exemption. However , all major banks do offer such exemption although not always on every type of account.

It is best to view the fee exemption as a concession rather than an entitlement. However banks do have an obligation to let customers know of such concessions by way of either a letter , an advertisement or leaflets or display in the bank. If they have not made a treasonable attempt to let customers know of such exemptions , it is possible to make a claim for the bank fees charged previously on that account .

The Ombudsman has given several rulings that illustrate how her rulings have been applied

  1. Couple A had been customers of the bank for many years . In July 1996 they started receiving superannuation . In July 1999 they discovered that they had paid bank fees unnecessarily for all this time and asked the bank for a refund of all fees paid. The bank refunded about a quarter of the fees as a gesture of goodwill but declined to refund the full amount.

    2. The matter was referred to the Ombudsman who concluded that the bank had provided couple A with information in a timely and adequate manner which should have alerted them to the fee exemption. The Bank had issued a copy of its fees and charges brochure in Sept 1996 which made reference to the fee exemption and claimed that it was available on the general brochure display stand which a customer might reasonably be expected to notice on a routine visit to the bank .

    The Ombudsman was satisfied that the bank had conformed to the Code of Banking Practice and ruled for the Bank

  2. Two complainants started receiving superannuation at the same bank one in 1994 and the other in 1995 . They both discovered in 1999 that the bank provided fee concessions. They considered that had they been aware of this at the time they commenced receiving superannuation they would have applied for it. They considered the bank’s failure to provide them with the information meant that they had paid fees unnecessarily and asked for a full refund.

The matter was referred to the Ombudsman . The bank had launched the fee concession with a brochure which remained unaltered until it ran out four years later. The bank did not reprint the brochure and did not know whether it was available at the bank concerned. The brochures were kept behind the personal bankers desk.

The bank had widely advertised fee amendments in recent tears resulting in customers contacting the bank for the most efficient fee option. Another fee review information sheet produced in December 1999 stated in a footnote that the fee concessions still applied.

The Ombudsman judged that the bank had not supplied timely and adequate information to ensure the two complainants were aware of the concession and how to apply for it . That the information in the September 1999 brochure was not adequate nor timely and also did not satisfy the Code of Banking Practice. In addition the brochure was not on display or easily accessible.

The Ombudsman recommended that all fees be refunded

Under the Code of Banking Practice the banks do have an obligation " to make timely and adequate provision of information to help you understand how your bank accounts and banking services operate so that you can make an informed choice to best suit your needs "

In the view of the Banking Ombudsman banks should meet this obligation by advising all customers when fee concessions are introduced and when any alteration is made to the terms on which they are available. Information about concessions should be readily available and should be on display in branches and/or on web-sites. It should be included in any brochure or other literature explaining account fees . Staff training should include a reminder to check that information about the concession has been made available to customers with whom staff are dealing if it seems likely that they qualify.

In short , a bank should use its best endeavours to ensure that eligible customers are aware of the concession and how to apply for it. If it has been demonstrably done so . it is not obliged to apply concession retrospectively , though it may , of course , be good customer service to make some refund.

The Banking Ombudsman may be contacted at PO Box 10-573 , The Terrace , Wellington or phone 04 471 0006 or freephone 0800 805 950 or fax 04 471 0548

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