Legislators yesterday attacked a decision by the two largest local banks to raise service charges, saying it proved the need for a financial ombudsman to handle complaints and protect the public from fee-gouging. Hongkong and Shanghai Banking Corp and subsidiary Hang Seng Bank announced that from May 1 they would charge $120 when asked by customers to investigate money transfer errors through ATMs. The two lenders also increased charges for late payments on credit card accounts. Previously the banks levied a charge of 5 per cent of the minimum payment due on a credit card account, or $100, whichever was higher. Now it will charge 5 per cent, or $130, whichever is higher. The moves, which came after several service fee adjustments by other banks since January, angered several legislators. Albert Ho Chun-yan, deputy chairman of the Democrats, said his party would demand the government set up a financial ombudsman's office. 'The Hong Kong Monetary Authority (HKMA) has no power to handle customer complaints at the moment. As banks are increasingly adding fees and charges, it is necessary to have such a channel,' Mr Ho said. 'The fees and charges of banks are regulated neither by the Hong Kong Monetary Authority nor the Hong Kong Association of Banks. The banks have the freedom to increase any fees any time they like without facing any scrutiny.' A legislator of the Democratic Alliance for Betterment of Hong Kong, Wong Kwok-hing, said HSBC had no reason to increase service charges after the group's Hong Kong arm posted record profits of $33.56 billion last year, up 30.1 per cent on 2003. 'When the bank is making such a huge profit, it is not under any financial pressure to collect more pennies from the men or women on the street,' Mr Wong said. 'HSBC should consider its social responsibility to Hong Kong.' An HKMA spokesman conceded the authority did not have an explicit statutory responsibility for consumer protection, but he did not see the need for a financial ombudsman.