Tan Kin Lian's Blog: Excessive bank charges

Monday, March 08, 2010

Excessive bank charges

2 March 2010
Editor
Forum Page
Straits Times

I refer to the letter from Vincent Chan entitled “Why impose hefty credit car surcharge?” (ST 2 March 2010).

I wish to quote two other examples of hefty charges by banks in Singapore:
a. Recently, I made a payment of USD 1,810 to a factory in China. The bank charge amounted to 53 USD was deducted from the payment. The factory in China, which had earlier agreed to bear the bank charge, complained that the charge was too high.
b. I received a letter from my bank stating that the administration fee for a late payment on credit card is $50. This is in addition to the interest rate of 2% per month that they charge on the rollover balance.

In both cases, the bank charges are exorbitant relative to the marginal cost of the service that is being provided.
As the banks are already making big profit from the huge interest spread, why are they allowed to make more profit from these exorbitant charges?
After a customer has opened an account, it is difficult for the customer to change to another bank. In any case, nearly all banks seem to be operating a cartel in levying hefty charges to boost their profits.

I wonder if the Monetary Authority of Singapore considers it to be their duty to regulate the banks to treat customers fairly, including the levying of reasonable charges for essential banking services?

Tan Kin Lian

Bank charges - excessive is the word

I WISH to add to Mr Tan Kin Lian's lament about excessive fee charges by banks in his letter last Thursday, 'Banks do it too'.

My company's bank statement says:
- Balance brought forward (overdrawn) $3.61
- Service charge $15
- Overdrawn interest charge $10
Now how many per cent interest is that?

Michael Lim

13 comments:

Anonymous said...: If you have no money in the bank, just keep cash as banking services are expensive. So dont complain abt bank charges as you can also dont use them. No one put a gun at your head.

David Bull; March 08, 2010 9:08 AM
Anonymous said...: Dear Mr Tan. Ref. your comment:
" I wonder if the Monetary Authority of Singapore considers it to be their duty to regulate the banks to treat customers fairly, including the levying of reasonable charges for essential banking services? "

In keeping with the drive to increase productivity, the MAS response would likely be:

Dear Mr Tan
May we refer you to our MAS website, http://www.mas.gov.sg/about_us/Introduction_to_MAS.htm

Bank charges are determined by a free market on a willing buyer, willing seller basis.

As such, the bank charges you highlighted does not come under our mandate.

Thank you for your feedback and interest in our organization.

How's that for productivity? 10 minutes and case is closed.; March 08, 2010 9:51 AM
Tan Kin Lian said...: Reply to David Bull,

Banking is an essential financial service.

Bank charges should be reasonable, and not excessive. Banks should not use their cartel power to levy unreasonable charges, after they have already made huge profit on their interest spread.

Some customers have no choice, but to use the bank to receive their salary and make payments.; March 08, 2010 10:11 AM
Tan Kin Lian said...: The Straits Times took off my last sentence, which as if MAS consider it their duty to make banks levy reasonable charges. This statement did not appear in the newspaper.; March 08, 2010 10:13 AM
Tan Kin Lian said...: After receiving the letter from American Express about the $50 penalty charge for late payment and insufficient funds on my credit card, I called the bank to cancel the credit card. They were surprised at my action. This bank said that other banks were also levying similar charges.

I learned later that the statement is true. But, I cannot cancel all of my credit cards. So, bad luck to American Express.; March 08, 2010 10:21 AM
Anonymous said...: Yes, bad luck to American Express!

There are many other credit cards available, no fears.

I support your actions. I too, faced similar charges and poor service too!
and I have cancelled OCBC cards.
It is daylight robbery and it happens right under the regulators nose.

The only choice we have is to vote with our feet. I only wish that many will do what you and I did with full conviction and fearlessly.
Alas!.. the young ones love the prestige of a black coloured card and the names: GOLD, PLATINUM..

I think we are the minority.; March 08, 2010 11:27 AM
Anonymous said...: Consider other payment alternatives such as PayPal.; March 08, 2010 1:28 PM
Anonymous said...: ANON, 9.51am "How's that for productivity? 10 minutes and case is closed."

This is called Tai Chi Chuan, Singapore style.

You must master this skill in preparation for Singapore's "new productivity drive." Otherwise, you will be working until 9.00pm every night, 6 days a week.; March 08, 2010 1:38 PM
Anonymous said...: This is the reason why it is important for organisations and individuals to have good relations with the newspapers editors. I believe this is the reason why NTUC Income now advertises frequently with the newspapers too. By using policyholders money, they are buying insurance for themselves so that sentences that do not put them in a good light can be conveniently deleted and sentences that put them in a good light be put in prominent pages. Look no further than what NTUC Income CEO is doing and we can see why it is advantageous to cut down on policyholders bonuses and use it to buy insurance for themselves in this way. Win-win for the organisation, individual and the press. Huat ah!!!; March 08, 2010 2:39 PM
Parka said...: Most of these charges are unjustifiable.

And it seems that competition doesn't and is unable to lower these charges. So something is definitely wrong with the banking system.; March 08, 2010 6:43 PM
Anonymous said...: I have withdrew my home loan from RBS recently but I am still keeping the current account with them. Since I am no longer a value customer, they impose $30 charge per month to my current account as the min amount needs to be more than $10k. I really think that it is a day light robbery.; March 09, 2010 3:15 PM
Parka said...: I just can't see how costly it is to overlook an account that has no money. It's not as if it's a physical person looking over it.; March 10, 2010 8:50 PM
Jimmy Ng said...: We should have the Competition Commissions of Singapore to review the banker's practices & charges.

Unlike hawker food where the customer had plenty of choices, in a regulated environment, the bankers behaves more like a cartel with their charges, practices and demands.

In Singapore, there is not too much competition of basic trade services like remittences. Why charge a % commission on the amount payable ? I feel that it is none of the banks' business when they have cable charges ($30, that is a lot of cable & phone calls / fax to make). In HK, it is a flat rate of HK$100 or S$18 - be it $10 or $1m that you are wiring out. In HK, there is the remittance agency business for bank transfer, especially fast and convience for wiring $ to China. While the same service is available in Singapore, but it is lessor known or "trusted" as it is not a bank. Hey, trust me, it works fast, cheap and never hickup.

I used to work for a distribution company who supplied some items to the bank. The bank oftens requires chase of payment and no interest payable for being late. Whereas we get slapped with a hill full of charges once the dateline is missed.; March 15, 2010 11:36 AM