Westpac scraps penalty fees

Westpac in New Zealand has followed the BNZ and announced the binning of its "exception" fees for customers' accounts going into the red.

In a widely-tipped move, the bank today said it would cut exception fees on all credit card, savings and transaction accounts, for both personal and business customers, from between $25 and $30 to $9 from October 1, which will cost the bank about $50 million each year.

The fees are charged when there are insufficient funds available to make a payment, when an account is overdrawn without an overdraft facility in place, or, in the case of credit card accounts, when a due payment is late or an account goes beyond its agreed limit.

Following the move by its parent in Australia yesterday, Westpac New Zealand will remove honour fees (currently $25 per event) entirely. An unarranged line of credit charge will be applied when a customer becomes overdrawn without a pre-arranged facility, but this will be a single charge of $9 per month.

Last month BNZ said honour fees, dishonour fees and unpaid bill fees on transaction and savings accounts, for both business and personal accounts, would cease on September 1.

BNZ charges a $35 dishonour fee and a $20 honour fee.

Westpac chief executive George Frazis said it had become clear some of the fees were contributing to a negative perception of banks, as well as proving a particular burden for a small number of customers having difficulty managing their finances.

"In our view, offering the benefit broadly across our personal and business customers, including credit card holders, is the right approach and will provide significant relief."

However, it was still appropriate to continue to apply a fee for service in some instances, which would ensure customers were not encouraged to overdraw their accounts and pay additional interest rate charges, he said.

"This represents the most significant move on bank fees the New Zealand public has seen for a number of years.

"It is a challenging time, but this is absolutely the right thing to be doing as our customers need us more, and need us to help their own efforts to manage their finances."

- NZPA