James Middleweek

Sorry seems to be the hardest word

James — Thu, 06 Sep 2012 08:47:34 +0000

A great victory in the High Court today against ANZ on an expanded doctrine of penalties. I see that ANZ is still committed to defending these charges as a true cost recovery. Given that they have slashed their exception fees from $35 to $0-6 that may be a challenge. Are they really now losing $29 each time a customer goes overdrawn ? I hope not for their shareholders sake.

Telco Confusopoly to continue

James — Thu, 12 Jul 2012 03:38:15 +0000

Yesterday, ACMA released the Telecommunications Consumer Protection Code 2012. This is a revision of the 2007 code, which has proved woefully inadequate to protect consumers from bill shock.

On the face of it the new code obliges telcos to be more upfront about pricing. But real transparency will never be possible while telcos continue to sell plans under the “Included Value” system. Once customers exceed Included Value, call and data rates increase dramatically.

Is it so difficult for telcos to offer customers one level of call and data rates across the board ? Of course not, but this would educate customers to the true cost of calls and data, and lead to lower prices.

The hidden scandal of Consumer Credit Insurance

James — Mon, 12 Mar 2012 03:56:18 +0000

Have you ever signed up to a Consumer Credit Insurance (CCI) policy? These policies are products that are designed to cover some or all of your repayments, e.g. if you lose your job. This type of insurance is usually sold concurrently with a credit card, personal loan or mortgage.

However, to sell as many of these CCI policies as possible, financial institutions (such as your local bank) may engage in practices that gloss over the many limitations of a typical CCI policy, or even engage in practices that are misleading. In particular, you may not realize that CCI payments are often taken upfront as a lump sum, significantly increasing the size of your loan and the amount of interest you have to pay.

In the UK, banks are having to repay literally billions of pounds to consumers who have been mis-sold CCI . We believe a similar situation exists here in Australia, and that thousands of Australians are paying top dollar for policies that they didn’t ask for, may not need, or can’t claim on.

Please contact myself or Steve Wilding on 1300 473 373 for further information.

Banks and the small business squeeze

James — Fri, 09 Dec 2011 01:18:48 +0000

The spotlight is back on the banks following the initial partial success in the ANZ class action on late payment fees, and the rate rise debate that has followed. In many ways, though, the bigger, less heralded story of the last few years has been the relentless squeeze on small business by the banks. Today, for example, the AFR reports that the average loan to small businesses has risen 2.4 percentage points over the last three years, during which the RBA cash rate has fallen 3 percentage points. Go figure.
The other area, on which we are constantly approached, is the fall out from the GFC in terms of property lending. Having serially overlent to the would be developers and speculators of the 06-09 vintage, the banks have been busy reversing the situation ever since. The effects on the individuals concerned have been devastating.

The Great Rip Off Fee Debate – Jetstar

James — Thu, 13 Oct 2011 01:31:18 +0000

I expect a judgement in the test case against ANZ on penalty fees in the next couple of months.

If it is successful, it will inevitably throw the spotlight not just on bank fees, but also many other walks of life where consumers are slugged with arbitary, add on fees.

I would welcome readers’ contributions to the rip off fee debate. One such example, concerning Jetstar, was provided to me by a Queensland reader, which I print below:

“I travelled to Hawaii last week with Jetstar. Assumed because they give you all the benefits of going to Qantas Club as well that it would cover the extra 10kgs for baggage as well. Found out differently when I got to the airport as they strictly enforce the 20kg limit and say they have no connection with Qantas.

What was “interesting” was they charge you $25 per kilo for your extra weight even though you can book an extra 20kg online before you get there for $50. In our case the plane was only one third full so it can’t really be an “overweight” issue. We paid $400 because I had 36kg rather than 20kg. The guy before me paid an extra $375 having made the same mistake and the guy behind me in line paid $1000 because he and his wife had 40kg each. Interesting that they can charge you a fee which clearly doesn’t reflect the cost of them carrying the extra weight. I’m sure if it was reflective they wouldn’t be allowing you to purchase the extra weight online for $2 per kilo rather than $25 per kilo.”

Telco Complaints Handling

James — Thu, 02 Jun 2011 04:07:06 +0000

ACMA might be interested in a classic exchange between a Three Mobile customer service representative called Richard and our Operations Manager Steve Wilding today in respect of one of our clients on whose behalf we had sent a written complaint. They are required to deal with validly appointed customer advocates.

Call from Three : We need to get a security code for your client.
Steve: fine, which one ?
Three: I can’t tell you.
Steve : How can I give you a code if I don’t know who the client is ?
Three : It’s up to you to know who the client is.

Sad, but true.

A ticking Time Bomb ?

James — Fri, 20 May 2011 03:26:08 +0000

The news that UK banks are having to repay billions of dollars to consumers who were sold Loan/Payment Protection insurance raises the obvious question – why isn’t the same thing happening here ?

The banks love this type of insurance product – it’s one of the highest margin products in their portfolio, pricing is uncompetitive and it’s rife with exclusions and limitations.

What may look like small weekly payments become less so when the whole of life premium is added to the loan upfront, upon which the borrower then pays interest. So a $20k car loan becomes $21k from the start.

And what happens to your premium when you sell the car six months later – what do you think ?

This has been a live issue in the UK for over five years now, and has ended in real success for regulators and consumers. Australia take note.

ANZ’s fear of regulation

James — Fri, 18 Feb 2011 02:46:32 +0000

I see that ANZ CEO Mike Smith is worried that foreign investors will be scared away from investing in Australia because of ” the populist approach” towards the regulation of banks.
The sad truth is that overseas shareholders perceive Australia to be a country where oligopolies, whether in banking or other sectors, can fleece their customers without the normal laws of competition applying. Hopefully that is starting to come to an end, which may not be ideal for institutional shareholders or CEO’s incentive bonuses, but is good news for that other group of stakeholders – customers. It’s a pity Mr Smith doesn’t appear to show them the same level of concern.

Tackling the Telcos

James — Tue, 01 Feb 2011 01:39:41 +0000

Financial Redress has just launched a new service to help consumers recover excessive call costs above their “cap”.
The very term “cap” is itself misleading, when it’s actually a minimum monthly spend. “Included value” is a sham, because it’s based on call charges of 80c to a dollar. If Amaysim are able to offer a service at 15c a minute including flagfall, why should the big operators be able to get away with 80-100c plus flagfall ?

A garage offering you $50 of value for $10 wouldn’t be much use if they charged you $15 per litre for petrol, yet this is what goes on in telco land.

Confusing the customers is simply a way to keep call and data charges artificially high. Change is long overdue.

We intend to expose the telcos practices for what they are, and help customers who have been misled recover compensation.

The cost of Books in Australia

James — Mon, 10 Jan 2011 07:19:39 +0000

The high cost of books here, compared to other English speaking countries, has long been a bugbear of mine. Today was a shining example, when I was buying books for my 9 year old son at Borders. The hardback Chronicles of Narnia retails at Borders for $76.99, when in the UK it retails for the equivalent of $46.50. That’s a 65% mark up. I ended it buying it online at www.bookdepository.co.uk for $49.85, including shipping.

When I pointed this out to Borders head office they said this might be because it wasn’t a high volume book, but exactly the same mark ups apply to popular fast moving kids paperbacks as well. For example, the Andy Griffiths series, which retail for $16.99 here yet can be bought for $6-8 including shipping from the UK. Even Borders online store charges $13.95 without the excuse of expensive High Street premises !

Instead of lowering prices and reducing their cost structures, all retailers do is try to discourage consumers from shopping online by a hard luck GST campaign. The public rightly has no sympathy, lets just hope the government doesn’t either.