Bank Exit Fees

Reporter: James Thomas

It's on, war has been declared on the Big Banks as anger turns into action. We're being told that if we don't like what our banks are doing, then simply dump them. And other lenders are waiting to pounce, one is offering customers cash incentives to switch.

As James Thomas reports, it could be the first move by small banks, credit unions and other non-bank lenders to offer true competition.

Best bank loan Mozo CEO Rohan Gamble "this feels different to me, this time I think the commonwealth bank has underestimated Australians. This time I do think there is going to be action."

"The banks are in the black but they're doing their best to put us in the red." Says one angry customer. They're just crooks."

"Where's their compassion for consumers, customers families? there's none." Comments another angry customer

I think it's time that Australians recognise that there is alternative choices in the market place. What's this, a banker masquerading as a white night, prey tell

Don from ING says "the deal is, $1000 dollars to switch your bank, move with your feet, come to ING direct."

James "You heard correctly. ING direct know that a lot of people don't change banks because of crushing exit fees which force them to sit tight with a deal they hate. But now the game has changed, noting the searing anger over exit fees ING decided to offer $1000 dollars to help people break from their current mortgage and take up with them instead."

So what is the catch?

Don "It's not too good to be true. Reality is, the deal itself is all about getting people to switch, getting people to think they can actually move and move their banking. In addition to the cash handout, ING Directs variable rate is currently 6.74 % that's better than all of the majors."

James "Ok so, you're expecting a deluge of calls no doubt."

Don "expecting, capable of taking and wanting those calls."

James "ING Directs CEO Don Koch (cook) isn't really a saint. It's just good business. the bank could spend a couple of hundred thousand dollars luring people in with thousand dollar handouts but In return, ING will receive millions of dollars in new mortgage business from people itching to swap banks."

Don "James I don't see this as an opportunity. I see this as an offer into the Australian market place to promote competition and to offer some assistance in the model of switching. ING Direct will also look like the good guys for alleviating the pain of exit fees but don't be fooled. Once you join Don and his merry men, they're just as keen to keep you locked into their contracts and there is nothing stopping them from raising their rates."

James "Let's say I come over, I grab my thousand dollars from you but I am not happy and I decide to leave, will you charge me exit fees."

Don "The core message is about switching."

James "But the core message from consumers is they want to switch from any bank without being punished. Even if you did give them one thousand dollars to join."

James asks Don "do you agree that exit fees are punitive."

Don "no I do not agree."

Julia Gillard "I believe Australians are sending the banks a message loud and clear."

The government is in damage control. The Prime Minister and Treasurer are promising to give ASIC and the ACCC power to punish banks that charge exit fees which are deemed unfair. If they succeed, people will be free to move banks

Rohan Gamble is the managing director of comparison website MOZO. He says "the only way the banks are going to listen is if we all vote with our feet and get up and do something. There are some incredible deals out there, you can save tens of thousands of dollars over the life of your loan."

For example Ralph Norris and the Commbank's standard variable rate is a whopping 7.81%

Go with State Custodians and you'll pay just 6.39%

Gail Kelly and the crew at Westpac are offering 7.51%

Ratebusters.com.au blow it apart with 6.43%

Cameron Clyne and the NAB wants you to stick with him at 7.24%

Why would you when you can get Mortgage House to give you 6.49%

And then there's Mike Smith who wants you to stay put with ANZ's 7.41 percent but burn that contract in favour of Homestar and you'll pay just 6.47%

If you look around, similar savings are also out there for fixed rates.

Rohan "That's why we need to get some genuine momentum, people need to genuinely act. The only thing the banks will listen to is everybody moving. None of the banks would comment today on speculation they will move ahead of government measures to reign them in by voluntarily killing their exit fees. The only thing that is guaranteed is that more banks are expected to raise their rates this week, including ING direct."

Don "We are a competitive space and we actually have to have cost recovery."

But ING Direct insist any rise in rates will not be as severe as the major banks and will not claw back the 1000 dollars cash currently on offer to new customers.

Don "The reality is it is time to switch and we are offering that chance."

Christopher Zinn from Consumer advocacy group Choice says class action law suits and lobbying are part of the arsenal currently being employed to reign the banks in on unfair exit fees and a raft of other unfair charges.

James "why not other unfair bank fees? when they ping you $25 bucks or whatever if you're a day late paying your credit card, we can't believe that actually costs the bank $25 any cost they put on to you in terms of fees should be proportionate to the cost they bear. not a figure they pluck out of thin air.

We've heard these lines from Consumer groups a thousands times. But this time the message seems to be reaching the ears of the powerful.

The big banks rise rates further than the reserve because they say times are tough. But CEO's earn 16 million dollar salaries and announce record multi billion dollar profits. No wonder Ralph Norris, Gail Kelly, Mike Smith, and Cameron Clyne have been charged with acts of complete bastardry against their customers who are now truly fed up and desperate to exact revenge."