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Banks give people access to their own money. What happens when they don’t work?

admin — Mon, 21 Oct 2024 04:58:32 +0000

Banking apps put our money just a few finger swipes away, and moving money from one account to another is just a few seconds’ work — until something goes wrong.

After disruptions hit some Westpac and Commonwealth Bank customers, a finance and risk management expert is advising Australians to take matters into their own hands.

“Everyone should be banking with at least two banks,” Professor Elizabeth Sheedy told the ABC.

“This goes beyond who is offering the best deal – it’s about making sure you are going to be able to access your money.”

In the digital-age equivalent of stuffing cash under the mattress, Professor Sheedy, from Macquarie Business School, has warned it’s a matter of people spreading their risk across institutions.

But that’s not to say banks shouldn’t do better.

Professor Sheedy described the response from Westpac as “very disappointing”, noting the bank’s recent releases on their media page list charitable works but nothing of the outages.

“Whatever the cause is, they should be letting their own customers and the market as a whole know — it’s relevant for shareholders,” she said.

“Westpac is very quick to point out all the wonderful stuff they are doing.

“They need to look after their core business — making sure people can access their money.”

Complaints rolling in after Westpac outages, CBA double-charging

Customers of Westpac, and its subsidiaries from St George to Bank of Melbourne, took to social media and wrote to the ABC about the inconveniences of the internet banking and app outages.

While payments and transactions still worked (provided you knew which account you had money in) and customers could visit a branch, the reaction shows just how reliant many are on being able to move money and check their accounts in real-time.

Commonwealth Bank customers were able to log in — but many were left shocked by what they discovered.

Some found their bank accounts overdrawn or had much smaller balances after duplicate transactions were taken from their accounts.

CBA has said any fees charged as a result of customers being affected by the issue will be reimbursed.

The Australian Financial Complaints Authority (AFCA) has already seen a “decent number” of complaints lodged regarding the incidents at two of the country’s four major banks, lead ombudsman for banking and finance Natalie Cameron told the ABC.

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Can bank customers get compensation?

AFCA primarily awards compensation for financial losses suffered, or as Ms Cameron puts it, “we aim to put people back in the financial position they were in had it not been for the outage [or issue].”

Customers are advised to first contact their bank, which then has 30 days to respond. If this response isn’t satisfactory, then a complaint can be lodged with AFCA.

For financial losses, people will need to provide validation of the loss, such as a record of fees charged or a demand for payment.

But some of the effects might not show up in late fees or penalty notices.

On social media platform X, one mother described the embarrassment of being unable to pay for her groceries at the supermarket check-out, due to the CBA double-charging issue.

Ms Cameron said a complaint likely involves a reasonable level of stress or inconvenience, by its very nature.

But there are some extreme cases where AFCA will consider awarding compensation for non-financial loss.

“It has to be something that goes beyond the normal level of frustration,” she said.

“It’s really difficult to imagine the vast variations of impacts — it’s completely possible that there’s a significant impact to someone’s life.”

Professor Sheedy argued that the banks should be looking to compensate customers as a matter of ethics — and public relations.

“They’d be keen to manage damage to their reputations.”

Professor Elizabeth Sheedy says Australians should spread their money between banks as cyber attacks and tech issues increase. (Supplied)

Westpac, CBA haven’t revealed cause of issues

The ABC has corresponded with Westpac and CBA but neither bank has provided explanations for what caused the issues.

On the third day Westpac Group customers had reported access problems, Treasurer Jim Chalmers said the government had been in contact with the bank.

The treasurer said such an incident “enlivens the cybersecurity part of our government” and noted that more interruptions are occurring in an increasingly digital economy.

“All banks are under constant cyber attack — it’s never ending,” Professor Sheedy said. “Tech problems happen all the time.”

While Professor Sheedy has warned individuals to manage their personal risk by using more than one bank, she said banks need to up their game on risk management.

Bank risk management policies were in the spotlight during the banking royal commission back in 2018, but in the years since, “people start to forget”.

“The trouble with risk management is it always costs more.”

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Push to axe sneaky fee costing Aussies $4billion

admin — Thu, 10 Oct 2024 21:54:37 +0000

By Jessica Wang For Nca Newswire

Published: 17:40 EDT, 10 October 2024 | Updated: 17:54 EDT, 10 October 2024

A federal MP has called on the Reserve Bank to end surcharges on card transactions and tap-and-go phone payments which cost Australians $4 billion a year.

Jerome Laxale, a Labor MP who represents John Howard’s old Sydney seat of Bennelong, has launched a petition to end provisions that charge businesses to use card technology, with those fees then passed on to customers.

Mr Laxale said the surcharges were imposed at a time when card payments represented a minority of transactions, but now that they account for the bulk of payments, the rules should be reviewed, and called on Commonwealth Bank and Westpac to do something about it.

‘We’re in the middle of a cost of living crisis. Consumers are being charged blended rates, 1.1 per cent to 1.6 per cent and it all adds up. To consumers that’s around $140 a year,’ he told NewsWire.

‘Cash is down to 30 per cent, debit is the new cash. Why is it that we are still paying increasingly exorbitant fees each and every time that we present our card or we tap.’

His petition comes ahead of the RBA’s ‘holistic review’ of regulations around payments, including greater transparency around costs and how they’re being passed onto consumers.

The central bank’s Payments Systems Board is set to receive submissions in the next few weeks and begin consultations in December.

While Mr Laxale said he would prefer the RBA to end the payments, but if not he would push for government to step in.

Bennelong MP Jerome Laxale is pushing the RBA to scrap fees for digital card payments

‘I want the RBA to do what other reserve banks have done across the world, and legislate in favour of small businesses and consumers, because the inequity here doesn’t make sense anymore,’ he said.

‘The good times should come to an end for these banks and card issuers’.

Earlier this year, research from Canstar found Australians were paying $4 billion a year in card surcharges.

Year-on-year the amount increased by 6.4 per cent, or $400 million, due to the increasing costs of transactions caused by inflation.

Earlier this year, Mr Laxale grilled the bosses of the big four banks during a parliamentary inquiry, asking why a $5 coffee costs him $5.08 when paid via a debit card.

While debit cards incur under a 0.5 per cent payment fee for merchants, the fee can extend to between 1 per cent to 1.5 per cent for Visa and MasterCard credit cards, according to the RBA.

Bennelong MP Jerome Laxale said regulations around card surcharges were dated

Westpac boss Peter King acknowledged the rules were ‘confusing’ for customers, and said customer surcharge rates should be reviewed.

‘We really have to think about whether surcharging is worth it, because I’m not sure it’s driving the policy intent,’ he said.

‘There’s no other cost in a business that people get to surcharge.’

Commonwealth Bank chief executive Matt Comyn said he believed the $4bn figure was exaggerated, and said Australia had some of the lowest debit interchange fees in the world.

‘Generally, there is nothing ever that is free,’ he said.

‘Businesses are paying less by using electronic payments than by using cash … In this case, it really comes down to whether the lower costs of those inputs are being passed on to consumers.’