The Australian Bankers Association’s (ABA) rejection of key recommendations of the Khoury review to stop 'tricky' interest charging and commit to online cancellation of credit cards will hurt banking customers and demonstrates the urgent need for the Turnbull Government to bring forward legislation that will protect credit card customers from these unfair practices.
In his review, Mr Khoury said that charging interest on a portion of a credit card balance that has been paid on time is “unacceptable and must be prohibited. It is substantively unfair in applying interest and (if understood) would be perceived by customers as just plain ‘tricky’” (page 83, Independent Review - Code of Banking Practice).
The banks have responded to this by stating "the industry does not support the Code prescribing how interest is charged” (response to recommendation 23(a)).
Other recommendations of the independent review rejected or not agreed to in full by the ABA includes a clear recommendation to allow simple online cancellation of credit cards and calls to stop unsolicited offers to increase one’s credit card limit.
Almost a year ago Malcolm Turnbull promised to act on credit card reform, including these three recommendations but has not been able to deliver these much needed reforms.
For way too long banking customers have been ripped off when it comes to credit cards. Hidden charging, high interest rates, high annual fees, expensive rewards programs, exorbitant late payment fees and inappropriate lending practices have resulted in customers being slugged unfairly whilst the banks make millions in credit card profits.
The half-hearted response from the ABA today places the ball squarely in Malcolm Turnbull’s court.
Inaction on credit card reform is no longer an option from this weak Prime Minister.
TUESDAY, 28 MARCH 2017