Australian banks slammed for exorbitant penalties

Australian banks collected almost $1.2 billion in penalties last year with customers falling behind on credit card and loan payments and over-drawing their accounts as the economy headed towards recession.

Australian political leaders and consumer groups have flayed this fee haul by banks, but the banks said it was up to customers to change their behaviour if they wanted to reduce their penalties.

The Australian Reserve Bank figures released yesterday said that total fees collected by banks rose over 8 per cent to $11.6 billion last year, the fastest in five years.

Of these, almost $1.2 billion comprised "exception fees", charged for breach of the terms of a product such as falling behind on loan repayments, missing a card payment or overdrawing a deposit account.

Around 83 per cent of the exception fees were paid by households mainly on deposit accounts and credit card accounts.

Overall, households paid an extra $362 million in fees last year and businesses paid $ 6.74 billion. Charges from customers using ATMs other than their bank's totaled $ 640 million.