Surge in complaints as survey shows penalties for customers with low balances set to spread
Small depositors can expect to be hit with a raft of bank charges and fees in the next few months, with a survey showing most banks either have new policies or plan to introduce them when interest rates are deregulated in July.
A Consumer Council survey of charges on low-balance accounts reveals that eight out of 25 banks have already introduced minimum balance requirements and at least 10 are reviewing their policies.
Citibank stipulates a minimum balance of $30,000, while in most other cases the lowest balance is between $3,000 and $5,000. Service fees for accounts that fall below the minimum range from $25 to $50.
Customers with low balances face cuts in interest rates of up to three percentage points at 12 of the 25 banks surveyed.
Ten banks do not at present set a minimum balance or impose interest-rate deductions on low balances, but most are expected to announce changes in their policies by July.
The council's chief executive, Pamela Chan Wong Shui, welcomed increased competition in the banking sector but urged banks to consider customers' concerns.
'Market competition will benefit consumers, but of course we hope that banks will also take notice of the fact that banking services have now become a basic service for the community,' she said.
'There is grave concern among the public about the possible effect of the social exclusion of disadvantaged groups under the policies of certain banks, so I hope the banking sector will also take into account this factor.'
The council's records show a marked increase in the number of complaints about banking services this year.
The council received 283 complaints between January 1 and April 5, against 893 for the whole of last year.
Credit card services drew 130 complaints, followed by savings accounts with 47. A further 29 were received about mortgage services, while 15 involved personal loans and 10 were directed at general service charges.
Hang Seng Bank introduced a $40 monthly charge for account holders with low average balances on Wednesday, following an announcement on April 3 by parent HSBC of a monthly $40 fee on passbook savings account holders whose balances fall below an average of $5,000 a month.
Hang Seng Bank granted exemptions to all existing customers and to those new customers aged 65 or above, those receiving disability allowances, children under 18 and tertiary students.
Next month Hang Seng Bank will apply a four-tier interest rate policy - the same as HSBC.
Accounts with average monthly balances below $5,000 will have interest deducted from the standard rate by between one and 2.5 percentage points.
Average monthly balances of below $1,000 will attract no interest.