Why Kiwi customers aren't up in arms

George Frazis. Photo / Steven McNicholl

Commonwealth Bank of Australia chief executive Sir Ralph Norris and his A$16 million ($20.5 million) pay packet became a symbol of angst for the public and political parties in Australia.

But in New Zealand there has been little public outcry. This is despite the Banking Ombudsman this week revealing a record number of complaints and Westpac New Zealand boss George Frazis becoming the highest-paid executive of a public New Zealand company.

Bank workers' union Finsec has labelled Frazis' $5.59 million pay package "unethical" because of the economic conditions and the Government's deposit guarantee scheme which supported the banks through the worst of the financial crisis.

Finance Minister Bill English has called on Westpac to explain to its customers why it is paying its chief executive so much in this tough economic environment but says the Government won't be considering caps on bank executive salaries.

But the public has not made as much noise.

Sue Chetwin, chief executive of Consumer NZ, which regularly undertakes surveys of banks and compares their fees, believes Kiwis just aren't as vocal as Australians when it comes to the banks because fees are lower here and it just isn't part of the Kiwi nature to complain.

"It's a little bit different here, banks' fees and charges aren't as high as they are in Australia."

One of the biggest bugbears in New Zealand was the honour/dishonour fees charged for bounced cheques and unauthorised overdrafts but many of the banks either reduced or dropped those last year, she said.

"The honour/dishonour fees was something that really got people angry. I'm not saying the New Zealand situation is good. It's just not as bad as in Australia."

Chetwin said it was difficult to get a groundswell of people getting angry and class actions were much harder to take in New Zealand.

While mortgage rates were typically high in New Zealand compared with other countries, deposit rates were also high.

Banks took a lot of flak in 2008 and 2009 over break fees when mortgage rates started dropping and people who had signed up to fixed-rate mortgages discovered they had to pay large sums to get out of them.

Chetwin believed the banks had learned a strong lesson from that.

Massey University banking expert Claire Matthews said it was important to remember that New Zealand had done well out of having strong banks during the global financial crisis.

"We want the banks to make a profit because if they don't and they fail people will lose money."