Banks are urged to consider abolishing or extending the waiver for low-balance account fee in keeping with the principles enshrined in the Treat Customers Fairly (TCF) Charter which was signed up by all the retail banks in Hong Kong last October.
The call was made by the Consumer Council in light of the findings of a survey conducted last month by the Council on 20 retail banks on charges related to savings accounts in Hong Kong dollars.
Out of the 20 banks surveyed last month, 3 do not charge low-balance fee. The low-balance charges by 14 others ranged from $50 to $100 per month - $50 (8 banks), $60(4), $100(2).
Already the TCF Charter has moved a rising number of banks progressively in the direction of fee exemption or abolition. This is particularly evidenced in respect of dormant account fee. Whereas in a similar survey in 2009 it was the practice of all of the 20 banks to impose such a levy, none requires it any more.
A key principle of the TCF Charter about treating customers fairly aims, to provide reasonable access to basic banking services to members of the public, paying special attention to the needs of vulnerable groups. Savings accounts are beyond doubt a basic banking service to a wide cross-section of the public.
In line with this principle, banks are called on to examine their existing exemption policy on low-balance account fee or, alternatively, to consider abolition of such charges altogether in future.
According to the survey, in general, exemptions from low-balance fee apply to customers aged 65 or above, those below the age of 18, and recipients of Comprehensive Social Security Assistance as well as customers of low income. But as banks may vary in their exemption policy, consumers are advised to find out beforehand.
Related to the charging of low-balance fee is the low-balance account requirement. The 14 banks which charge low-balance fee, require a minimum balance of between $5,000 and $30,000 in the savings account; otherwise the fee will apply.
The survey also found more banks now required an initial deposit for account opening.
Although the range of initial minimum deposit ($10 to $2,000) remained the same since 2009, there are fewer banks requiring no minimum deposit for account opening - 3 compared to 5 banks in the previous 2009 survey. Further, 2 of the banks have actually raised the minimum requirement from $10 to $1,000.
Such changes are deemed unfavourable to the low-income group's access to basic banking service. They are advised to shop around and enquire about the need of minimum amount for opening savings accounts as is required by some banks.
The survey also studied the banks' service in the provision of monthly statements for savings accounts. Consumers can have the choice of either paper statement (available from all 20 banks) or electronic statement (only 16 banks).
In the former, all banks except one indicated they would not charge for mailing the paper statement; the one exception replied that if 3 or more statements were mailed upon request in one year, a fee of $20 per annum would apply.
Consumers who have scant knowledge of IT will have little choice but to adhere to the traditional paper statement. Special consideration should therefore be given to waive such a charge on them in order to continuously provide convenient banking service to the vulnerable groups.
In terms of convenient service, the number of bank branches spread throughout the territory could make a difference. The survey showed that the total number of bank branches has remained virtually unchanged - 1,105 in 2014 and 1,106 in 2009.
But a closer examination of the statistics may reveal some fundamental changes in the business strategy of some banks. Among the 20 banks surveyed, 7 banks trimmed down the number of branches by between 1.1% and a considerable 37%, while 10 banks expanded the number between 2% and a whopping 95.2%.
Some tips on avoiding unnecessary banking service charges:
- Pool funds from different bank accounts to boost the total sum of balance to avoid low-balance fee; and to upgrade to integrated account but consumers need be aware of its suitability and terms and conditions.
- Consider using banks that waive low-balance fee for certain customer groups, or those provide basic bank accounts with no minimal balance requirement.
- Perform transactions through internet banking where appropriate. It saves not only time to make transactions through branches but also money on some banking service items.
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