Govt may hold inquiry into banking charges

By AUDREY YOUNG political reporter

Banks could feel the heat of a parliamentary inquiry into bank charges, as discontent simmers over costs to consumers and business.

Commerce Minister Paul Swain wants the commerce select committee to conduct the inquiry.

His first aim is not to lower fees, but to improve the information disclosure by banks about their charging structures.

The Government moves come as a Weekend Herald series, The Banks, highlighted charges hitting customers over recent years while bank costs have been cut. The series continues tomorrow.

Mr Swain said he wanted the inquiry to take a commercial focus.

He said what he was interested in was whether transaction fees were appropriate and whether competition between banks in that area was as good as it should be.

He was "neutral" on whether the fees were too high.

Despite banks cutting costs, customers are charged for services including opening and operating accounts, overdrafts, cheque fees, direct debits, Eftpos transactions and telephone banking.

In April, protest forced one bank to drop plans to charge clients $2 for paying off their credit cards on time.

New Zealand banks' costs have been cut from 70 per cent of operating income in 1994 to 57 per cent.

The big five banks operating in New Zealand boosted their net after-tax profit by 37 per cent last year to $1.6 billion. In the past three years, they have averaged returns on net New Zealand assets of 24.4 per cent, compared with 16.1 per cent in Australia.

Mr Swain will ask the select committee if it could conduct an inquiry. He would then consider its advice.

"We are not wanting to get back into the heavy-regulated economy of the 70s and 80s.

"We want as much private sector involvement and internal regulation as possible."

The New Zealand Bankers' Association declined to comment.

WestpacTrust's spokeswoman, Jane Anderson, said it was too early to comment until the scope of any inquiry was known.

National Bank's spokeswoman, Cynthia Brophy, and the ANZ's Samantha Shaw said their respective banks would certainly cooperate if an inquiry were held.

Commerce select committee chairman and Labour MP David Cunliffe said the committee's workload meant it would not be able to consider Mr Swain's request until July.

He could not pre-empt the committee's decision but said the minister's views carried "considerable weight."

The other inquiry topic he had been considering was broader and was important in the context of the big current account deficit.

It would examine whether New Zealand ownership in the corporate sector mattered in terms of capital flows, business performance, foreign direct investment policy, and the development of industry strategy.

Mr Cunliffe said it was a very important strategic topic.

The disadvantage was that it might be too big for a select committee inquiry to deal with.

The banks - a Herald series

Tell us your story.

Contact: Mathew Dearnaley or Simon Collins

Participate in our online forum