Anna Bligh interview with ABC Perth on credit card access

EO&E

Nadia: Banks has been a big topic of discussion on the show this week because, of course, we’ve just been talking about behavioural security that the bank is bringing in. Earlier, I was telling you during the week that older women can’t get a credit card in their own name. They’re secondary card holders on a joint credit card. Something happens to their partner. They’re financially secure. They can’t continue with a credit card in their own name. I want to ask Anna Bligh about that as well. But before that, we also had that news that three banks will pay nearly $60 million in refunds to about 800,000 low-income customers after ASIC found they’d been charged incorrectly high fees. Let’s—so there’s a bit to ask Anna Bligh about this morning. I’m glad she’s able to join me. Uh, thank you so much. Good morning.

Anna Bligh: Good morning. How are you?

Nadia: Good. Well, if we can start with the excessive fees—three banks having to repay $60 million to customers they overcharged. Now, the banks should have told those low-income customers about lower-fee options and didn’t. Is that indefensible?

Anna Bligh: Well, what I would say, Nadia, is that this has been an issue that banks have been working with ASIC on for some time, and they have been very proactively reaching out to find customers who might be eligible for lower-fee accounts. And they’ve actually transferred one million customers into those low-fee accounts. What they haven’t been able to do is find and capture every single customer who might be eligible, and they have agreed to actually repay where those customers were in accounts that the customers signed up for but didn’t know that they might be eligible for something lower.

Nadia: So—and they didn’t know. They didn’t know because the banks didn’t tell them, and they should.

Anna Bligh: Well, that’s not always the case. Some of these customers signed up to these accounts maybe 20 years ago, before low-fee or no-fee accounts even existed. So it’s not a straightforward process to go and find people who might be eligible, but banks are trying to do a much better job on this. So they’re not only remediating those people who they haven’t been able to find or transfer, but they have been proactively reaching out, and they’ve already transferred a million people into the low- and no-fee accounts. So yes, they’ve got to do a better job, and that’s what they’re working with the regulator on. But I think it would be unfair not to recognize that they’ve also done a pretty extraordinary job in the last couple of years of finding those people, making sure—because some of the accounts with fees have other functions that people value. So it might have an overdraft function on it, and you don’t get that if you are transferred to a no-fee account. So there are some issues where customers need to be, you know, need to consider whether or not they want to be in a no-fee account, or whether the fees actually they’re happy to pay for that because they like the other features of the account.

Nadia: But our consumer protection commissioner was quite scathing, as was ASIC, and were saying that, you know, they should have been telling customers, and I appreciate that some people might have got an account 20 years ago, but if there is a cheaper option, they should be telling their customers; they should be doing the right thing by them, and they don’t. That’s what upsets people.

Anna Bligh: As I said, banks have accepted that they need to do a better job of this, but I don’t think it would be fair not to recognize the work that they’ve already done, because a million people transferred into no-fee accounts or low-fee accounts in the matter of three years is actually a big plus for those million customers. They’ve got more work to do, and they’re going to keep doing that work. And, you know, they’ve got some of this wrong. But I’m pointing out to you that not every customer who is in a fee-paying account who might be eligible for a no-fee wants to be transferred because they lose other characteristics—like some of them, not all of them, but some of them—value.

Nadia: Sure. And I guess what upsets people is that the feeling is that the bank, the bank’s shareholders’ interests, are put above the customers. It just seems to be profit over everything else. And again, they are the kind of things that, you know, our consumer protection commissioner has said again: it’s about their bottom line, and people feel a little blighted by that.

Anna Bligh: While these fees make—can make—a big difference to people on very low incomes, banks are not making massive profits out of very low-income customers. This is actually a matter of, how do you find these people? How do you determine whether they’re eligible, and how do you make sure that? I mean, let’s be honest, not everybody answers the letters that they get from their bank. It’s not as straightforward as, you know, when you’ve got thousands of people, as people might think. So, as I’m acknowledging, banks need to do better; they’ve acknowledged that. But I think the idea that they’re making high profits out of these customers is, you know, it just doesn’t ring true.

Nadia: The Commonwealth Bank is refusing to repay $270 million to its customers. Should it—

Anna Bligh: Look, each bank is engaged with ASIC on a bilateral basis. These are quite—you know, these are matters between the regulator and the bank. I understand that the bank has a different approach that they want to adopt with their customers, but really that’s a matter for them to continue discussions with the regulator, and I don’t think it would be appropriate for me to comment on that.

Nadia: Just on another matter, we’ve been looking at this on this show—women being financially disadvantaged. They have a joint credit card with their partner, but they’re the secondary card holder. Something happens to the partner—they either pass away or they get dementia—they then cannot get—and these are people that can service a credit card. They have good super; they’re financially very, very secure—but they don’t have a taxable income because they’re retired, and they cannot get a credit card in their own name, and they don’t feel that’s fair. Does that need to change?

Anna Bligh: Look, I’m very familiar with this issue, and I have a great deal of sympathy for the women involved, and I’m glad that you’ve raised it. So banks are subject to very tight lending laws, and those laws—whether you’re getting a mortgage, a car loan, or a credit card—they require banks to make an assessment of your income and whether your income allows you to service the loan. Then on top of that, specifically with credit cards, the law changed in 2019 that requires banks to assess whether or not, on your income, you could repay the total amount of credit you’re eligible for within three years. So say you apply for a credit card with a $10,000 limit; they will look at your income and say, if you spent that 10,000, could you repay that within a three-year period on your income? And that’s not an easy hurdle to pass if you are on a low, you know, retirement income—whether that’s a pension or some other, but you know, income that’s a low income. So that makes it very difficult for anybody, a man or a woman, to go and get a brand-new credit card in their retirement years. One of the other complicating things for women is that, more often than not, they have been a secondary card holder, and they may have been—the couple might have had the card for a very long time, but it means the woman has never had a credit history with a credit card, because it’s all been paid by her partner. So I think there’s some—there’s not a lot of awareness—

Nadia: Out there about this. They need it fixed. I’m running out of time, but they—you know, can they not be joint card holders, like equal card holders?

Anna Bligh: Absolutely, they can, but they need to go and apply to do that. So you know what I would say to your listeners: if you are not yet in your retirement years and you don’t have a credit card in your own name, go and apply for one as soon as you can, make some purchases, pay off the purchases, and then that credit card will continue to exist, you know, throughout your later years.

Nadia: So I need to leave it there, Anna Bligh.

Ends