Banks warned to watch fees

Commerce Commission will monitor the market. Photo / Supplied

Major banks are among credit card providers warned about excessive fees - as a consumer watchdog accuses them of "price gouging".

The Commerce Commission has written to eight providers telling them late-payment fees higher than $15 cannot be justified.

The letter came with a warning that higher fees were seen as a method of revenue collection and may break the law.

The commission wrote to American Express, ANZ National, ASB, the BNZ, Kiwibank, TSB, Westpac and The Warehouse.

The commission's fair trading manager for the Auckland region, Graham Gill, said the letter was a "line in the sand" and did not rule out taking providers to court if their fees increased. "We will monitor the market and take what action is necessary," he said.

Many providers dropped their fees to $15 or less when the commission began its investigation in the middle of last year.

Consumers' Institute chief executive Suzanne Chetwin said it was disappointing it took an investigation to get action.

She said the commission's move was evidence of over-charging in the sector and hoped providers would offer refunds to customers charged excessive fees. "We've been saying for years that banks have been gouging on all sorts of fees."

The director of Massey University's banking studies centre, David Tripe, said the question of gouging had yet to be determined.

"The Commerce Commission is obviously concerned the banks have been gouging, but it's yet to be verified that they have been."

Kiwibank spokesman Bruce Thompson said his organisation was weighing up how to respond to the letter: "We're looking at it and considering what we should do at this stage. We always take anything the Commerce Commission does very seriously."

Thompson did not rule out offering a refund if the fees were determined to be too high.

"I don't want to prejudge our actions," he said.

ANZ spokeswoman Gita Parsot said her bank had dropped their fee to $15, and it would not be increased.

Westpac's Liz MacIntyre said their fee was reduced to $9 in the middle of last year.

New Zealand Bankers Association chief executive Sarah Mehrtens said the commission's investigation was not what prompted the mid-year fee-drop.

"Banks are naturally competitive, and, of course, their pricing is open to question and competition."

Chetwin said people should read the fine print when they signed up for a credit card and compare the deals offered by different providers: "From here on in, people should definitely shop around to get the lowest bank fees."

In 2007 the commission forced banks to pay almost $50 million in fines and refunds for fees credit card users incurred when spending overseas.

matt.nippert@hos.co.nz