It’s official: we really, really, really hate the banks

notSue says:

11:29am | 07/11/10

Which bank do you work for again?

Luck y for some it seems. How jolly that you are so wealthy and the banks treat you royally. Pity about the majority of the population who are struggling with mortgages and rising interest rates whilst watching banks making obscene profits. How about coming down out of your ivory. platinum-plated tower and seeing how the other half lives for a change? ...and don’t give me the competition is healthy bs please, because you know as well as I do about prohibitive re-financing fees.

carsson says:

12:48pm | 07/11/10

Brando has a point

If you do your research you can get a good deal.

If you look beyond the Big4 you can get an even better deal.

There are amny credit unions and building societies out there all with competitve products.

People bashing banks are typically just ignorant bogans who are too lazy to do any research but want free money

FFS says:

02:23pm | 07/11/10

Perhaps you would like to put a photo of yourself up here and list some of your hobbies, likes and dislikes…. This is an opinion site, Brando, not a dating site. Thanks for telling us about how well-off you are, but it’s not about you. We are talking about the hundreds of thousands of people out there who the banks are actually targetting with unfair and unjustifiable fees, shady lending practices and blatant profiteering. The reason they can offer so much to people like yourself, is because they make so much from people who don’t have much. The Australian banking sector seems to be immune from many of the provisions of the Trade Practices Act, and the arrogance shown by the big 4 is starting to wear on the everyday customer underwriting these massive profits.
On another point, I’m getting sick of the bank CEOs telling us that healthy banks got us through the GFC. RUBBISH!! The resource sector, coupled with a $55 billion government surplus, allowing the government to offer a deposit guarantee, thereby freeing up the banks to trade relatively the same, was what got us through the GFC. The banks owe US, we don’t owe them.

notSue says:

03:33pm | 07/11/10

@Carson, how exactly does that help those locked into existing mortgages? Most banks charge massive exit fees and alternatives such as credit unions may not have the security of the obscenely profitable Big 4.  Mortgage brokers can go bust pretty quickly.

and please keep your ignorant bogan comments to yourself.  People don’t want free money, but they do expect customer service, they do expect not to be charged every time they sneeze and they do expect to be treated like human beings, not an acount number. It seems that unless you are gold -plated you don’t exist with them. Noticed the ‘we’re not like THEM” rash of ads on telly now? Just why do you think they became necessary- because people were so happy with their banks? Get real.

The banks don’t give a rats arse about the little guy, they make their money from financing big business and overseas investments, that’s why we really, REALLY dislike them.

carsson says:

03:55pm | 07/11/10

notSue cry me a river

Maybe if those “struggling” didn’t go and get a mortgage that they couldn’t afford just to buy a McMansion, a plasma tv, oversized SUV or two, holiday to Bali, jet ski, new clothes, eating out etc they wouldn’t be struggling.

nosthow says:

05:16pm | 07/11/10

@Brando - hey Brando I have heapps of telstra shares you can have for only $5 each fella ? A rich smart guy like you would snap up this offer quick huh ?

Mick S says:

08:02pm | 07/11/10

So just which bank is employing you as an executive?

Vicki PS says:

08:52pm | 07/11/10

You’re funny, Brando!  I never expected a bank executive to have such a lively sense of humour.  Or are you channelling Skase’s ghost?

Brando says:

11:05am | 08/11/10

Rich? Me? I don’t think so. I might not be broke but I’m not rich either. I’m just a small businessman. I have a little bit of cash and an investment property with a mortgage. Not exactly unusual and hardly rich

However rather than stand around whining about how the bank is so unfair I simply made sure they worked for me rather than the other way around. Surprisingly , if you ask them they are only too happy to do the same for you.

However, after reading the sneers from people here about a small businessman who has managed to accumulate at least a small amount of assets and is happy with his bank, I’m not surprised that you have some issues with your bank

notSue says:

02:02pm | 08/11/10

@ Carson “Maybe if those “struggling” didn’t go and get a mortgage that they couldn’t afford just to buy a McMansion, a plasma tv, oversized SUV or two, holiday to Bali, jet ski, new clothes, eating out etc they wouldn’t be struggling”

What an unbelieveably stupid, simplistic and selfish response. You’re really enjoying life in “I"m -alright -Jack -World”, aren’t ya?
I think you’ll find that people with unrealistic goals are not the kinds of folk I’m talking about here, but your average two-incomes-out -of-necessity kind of people (who perhaps do not have the money smarts you oh so obviously and ostentatiously do) , who are just tryiing to feed, clothe, house and educate a family on an average wage. Have a little compassion. Not everyone is able to run a business, and you probably work hard, but your doing well, unlike folk who take out a mortgage then find they are locked in and when tastes and charges rise the banks don’t want to know.

notSue says:

02:05pm | 08/11/10

Btw, I meant “rates,” not tastes…damn spellcheck!

Bruce says:

09:31pm | 08/11/10

Brando: I understand where you are coming from and those in your position would most probably agree with you. Considering the interest, fees and charges, on your investment loan is most probably a tax deduction, and you can leave sufficient excess funds in your other accounts to avoid fees and charges. The bank is still making plenty of money out of you. They are happy, your happy ! Unfortunately, thats not the case for many people, particularly first home buyers who have borrowed to the max.

4leaf says:

10:16pm | 07/11/10

Force you?  Nobody is forcing you - you are choosing to get a mortgage.. Don’t like it, don’t get a mortgage.  As for LMI - how about you save the deposit if you don’t want to pay LMI!  You can definitely get a mortgage without a credit card - look a tiny bit harder.

Biteme says:

04:02am | 08/11/10

4leaf your are completely wrong. Yes the CBA did force my my older son to take the credit card with the home loan. They told him he doesn’t have to use it, but it’s part of the acceptance of the Mortgage. That is bundling!
As for LMI it is a rort, to make a customer to pay for the suppliers insurance. And to not even give the customer an option who to use as the third party supplier is illegal. Even with car registration you have a choice of the third party insurer. So for all their fees and charges and interest what is the rick for the bank with a mortgage, they have the property as security and the customer to cover any short fall by insuring the bank as well. Banks a re just a business like any other? Show a business that can evade the Trade Practices Act like that?

Peter says:

09:37am | 08/11/10

You are not under any obligation to use your lender’s preferred LMI provider.

4leaf says:

10:18pm | 07/11/10

Are you serious - no if you’re under 18 the bank just gives its money away, without any conditions!

Biteme says:

04:08am | 08/11/10

4leaf, in essence the bank extended a line of credit without consent. There was no consent to extend unwanted credit It was a simple savings account. For all we know the account could have had a zero balance to avoid the direct debit payment because of dispute. Banks should not overdraw any account without prior written consent from the customer. It’s another money making rort that brings the banks around 3 Million dollars per day, and probably part of your salary.

FFS says:

01:37am | 08/11/10

4leaf, it’s apparent from your indiscriminate abuse of the people offering their thoughts here that you have a very limited knowledge of banking practice and more importantly, corporate and trade practice legislation. Your response to a valid question from Biteme reflects this. There is much legal debate about the validity of contract enforcement on minors (something which the phone companies fret over), and the point about charging such outrageous dishonour fees is very pertinent. It’s widely accepted that penalty fees must reasonably reflect the detriment incurred. It’s difficult to see how the fees imposed by banks for dishonours, late payments etc. are in any way justified.
You really need to climb down off your high horse and understand that not everything goes right for everyone all the time. People get mortgages, then may lose their jobs or have something else significant affect them and their ability to repay. This is where the banks generally act their worst.

Biteme says:

04:24am | 08/11/10

4leaf, you must live with Barbara in Bank World, do my taxes go to prevent Penfolds going broke? Do Penfolds force me to pay a third party of their choice to insure their business? Do Penfolds have a captured audience that is forced to use their services otherwise they can;t access their salary?
Can Penfolds take my money from my account and then tell me later why? Do Penfolds force it’s customers into signing imbalanced contracts that put their customers at disadvantage?
Are Penfolds allowed to breach common Trade Practises Acts that all other business is fined for?
Will Penfolds charge me $900.00 if I change and start drinking beer?
Do Penfolds force me to buy Grange in order to buy their cheap Port?
And will Penfolds walk in and takeaway my home if I fall behind in payments, or even take my home for no reason. Yes any bank can call in any loan regardless of on time payments or not. No mortgage or loan is safe in Fractional-reserve banking.
4leaf, anybody with a functioning brain knows that banks are in a privileged position and are not subject to same challenges as all other business. You been in bank world too long.

4leaf says:

07:33am | 08/11/10

Hardly indiscriminate FFS - I specifically said bank bashers are idiots and my point is further proved.  Biteme we guaranteed the banks to keep our economy from freezing - so the notion that we the taxpayers gifted them something for nothing is plainly wrong.  People who protest that the big four are “forcing” them to do things seem to have not done the most basic of investigations before voluntarily deciding to do their banking with a big four member.  I know, because I did the research when I took my medium income earned nowhere near the banking sector and got a mortgage for my moderate home (I’m hardly from bank world people).  I chose to go with a credit union and I pay a lower interest rate, with no “forced” credit card.  These are all free choices and the very foundation of bank bashing is the patently absurd pretence that our banking decisions are forced upon us.

RGG says:

08:59am | 08/11/10

FFS - are you serious? Speaking as a lawyer whose workload consists of quite a bit of consumer/contract law, the statement that there ‘is much legal debate’ over the validity of banking contracts with regard to minors is news to me. NSW has the Minors (Property and Contracts) Act dating back to 1970, for example. It has long been the law that people under the age of 18 have the capacity to enter into enforcable contracts, so long as that contract can be construed as being for their benefit. And no, the fact that they may have to pay exorbitant fees to get that benefit is not a vitiating factor.

Just because you say something doesn’t make it a fact you know.

Biteme says:

09:31am | 08/11/10

RRG, those contracts for minors are mainly to do with employment, (that is they turn up to get paid) and as you say construed for their benefit. Extending unsolicited credit is no benefit to any minor, especially when you charge 200% interest on it and call it a dishonor fee.
I feel sorry for your clients, they are not getting their moneys worth.
And 2 leaf all your arguments do not justify banks working outside the Trade Practices Act.

iansand says:

10:19am | 08/11/10

Biteme - Those contracts also include payments for goods (a sausage roll) or services (a bus ticket).  You would be amazed how many contracts you and any child enter into every day.

FFS says:

06:01pm | 08/11/10

Yes, 4 leaf, indiscriminate. I agree not everyone has a right to blame a bank for their misfortune, but many are wholly justified in doing so. Your assertion that bank-bashing is the sport of idiots would be a generalisation worthy of being indiscriminate.

FFS says:

02:39am | 09/11/10

Actually iansand, I don’t think biteme would be amazed at all. The contract scenarios you mention is something you learn in year 9 legal studies. The issue we are dealing with is the enforcement of onerous contract terms, something that has very little to do with sausage rolls and bus tickets. Same forest, different tree.

M says:

08:35am | 09/11/10

I suspect you really do work for a bank.

The banks are not a public service but they are clearly guaranteed by the Australian taxpayer and clearly operate as an oligopoly. If they operated in a free market without an implicit guarantee your opinion would have merit. But that is not the case.

At issue is the fact that there is a “nudge and wink” alliance between government in the form of APRA and RBA supporting profitable banks because it makes their life easier. On the other hand there is posturing by Swan and Hockey to mitigate the Australian public’s outrage. Hockey and Swan don’t mean it. Their life is made easier by profitable banks. Profitable banks do not go broke. Hockey/Swan don’t have to foot the depositor bill should a bank go under. Sounds logical doesn’t it?

However, at issue is the level of profitability and executive salaries. Is it fair for Banks to make 19% return on equity when all they are is extensions of government business via the implicit guarantee proven to exist in the recent past as the Australian government quickly moved to guarantee bank borrowings? Is it fair that to the taxpayer that Ralph Norris get paid $16m for running what in essence has proven to be a government department. Is Ralph any better than a Canberra departmental mandarin? For mine, the answer is; NO.

RGG says:

12:50pm | 08/11/10

I’m aware of the Minors Contracts (Misc Provisions) Act that SA has thanks. As you quite rightly point out, ‘unless ratified’. I’ve never known a bank to deal in verbal contracts. Lets avoid the ad hominem attacks hmm?

FFS says:

08:03pm | 08/11/10

RGG, two points: First, I am fortunate enough not to work in the area of contract law, so I will bow to your broader knowledge, however I will defend my comments by saying; when I did contracts and property law, the issue of minor’s capacity to contract was quite topical, specifically in regard to obscene phone bills and the rather onerous terms imposed on unwitting victims by unscrupulous providers. My recollection is that there was quite a bit of debate and confusion about enforcing terms of a contract with a minor, and the validity of their signature. As I recall, the textbook used the words ‘confusing’ and ‘inconsistent’ in this area. Surely you would understand the complexities of contract enforcement, even for adults. The duty to make harsh or onerous terms clear to the contractor becomes even greater when the contractor is a minor. Second, I believe it was you who attacked me initially with your incredulous and condescending reply to my post, so I would agree, let’s avoid that sort of thing.

FFS says:

02:28am | 09/11/10

Actually RGG, I think I may have given you a bit too much credit. Since getting home, I have done a bit of revision and researched this topic a bit more, as well as spoken to a couple of colleagues, and I can’t see anything that advances your argument. I stand by my initial assertion about the difficulty of enforcing contracts on minors and the uncertainty that surrounds the issue. Thanks all the same.

M says:

08:19am | 09/11/10

You are clearly not aware of the risk you took as a taxpayer-if something had happened to the banks you would have been on the hook for the total amount of the debt. The fee paid, 70bp, would have been no compensation for 100% of the debt. So forget the 70bp as a fair compensation, it was not. A private insurer of the debt at the time would have charged more like 300bp with serious covenants that the government did not ask for. The taxpayer guarantee was a freebie.

The real problem with the government policy at the time was that it allowed the majors to borrow at 70bp and the minor banks to borrow at [120]bp rendering them immediately uncompetitive. So what happened? The majors swallowed the minors and eliminated the competition.

But tell me, CBA was just able to earn 19% return on its equity yet it is proven to be more akin to a utility given that a taxpayer guarantee bailed it out. Why is 19% ROE the right number?. A super profitable government backed utility might earn between 8 and 10%, not 19%. The CEO of a government backed entity does not earn $16m, more like $1m.

The majors smell like utilities but operate as a government backed oligopoly. As a matter of public policy Australia has a problem.