Low-income earners ‘hard hit’ by charges

Press, 9 October 1987, Page 5

Low-income earners ‘hard hit’ by charges

By

SUE LANCASTER

Beneficiaries and low-income earners have been hit hard by new bank charges, according to two Christchurch voluntary groups.

“The dice is beginning to be loaded quite severely against the small depositor," said the Anglican City Missioner, the Rev. David Morrell.

The Christchurch Employment Network described the move by banks towards user-pays as “cal-

lous.” “Banks have to accept that certain services will not earn them money,” said a spokesman for the network, Mr Rodney Routledge. The network has been researching the bank charges for several months after cases of unemployed people having difficulties were drawn to its attention. The two groups were concerned by recent changes at Postßank and Trustbank — the banks traditionally used by lowincome earners. They feared that Trustbank Wellington’s move to charge $2 a month on savings accounts that dropped below $3OO might be taken up by Trustbank Canterbury. Mr Morrell said some of the charges causing concern were Trustbank’s fee increase from 20 cents to 40 cents for paying bills, Postßank’s $5 charge should an account holder be without their passbook, a $5 search fee

for 30 minutes, a $lO charge for losing a bank book and some Postßank branches requiring a minimum deposit of $5O. More recently Postßank had introduced a $2 charge for issuing bank cheques although the first cheque (at the manager’s discretion) was free. From November 1 savings accounts with less than $3OO will not receive interest. Mr Morrell said that when these were put together banks were saying to the small banker, “We're not interested in you.” “As I understand it, the origin of the Post Office Savings Bank was, in a large measure, an attempt to offer the facilities of a banking system to those on a low income with little facility to save,” he said. With the financial stresses of today it was vital for people on low incomes to have the facility to learn the arts of budgeting and saving. If Postßank deserted its role as the peoples’ bank where else could the small saver turn, he said. Mr Routledge said that Postßank, as a Government department, surely had a responsibility to all the people, not just the

more affluent A spokesman for PostBank, Mr John McCaulay, said the charges introduced by Postßank were no different from other banks. Postßank was not a Government department. It was a State-owned enterprise and its brief was "to operate a commercial entity that taxpayers are not required to subsidise,” he said. That meant that while it was “aware of its social responsibility, it is no longer a Government agency that works for purely social reasons.” Bank cheque fees were introduced to recover costs and speed up the flow of service. People had the option of paying their bills by personal cheques or by cash, said Mr McCauley. Although it was not Postßank’s policy to charge a minimum initial deposit, managers had the discretion to do so. Mr McCauley said the reality was that it cost Postßank money to run accounts. “If there is no money in them it is a losing business from their point of view.” Postßank would continue to service its traditional customers, he said. One in three New Zealan-

ders had an account with Postßank and they came from a cross-section of the community. The only difference was it hadd become a commercial venture and it had to recover its service costs in an effort to reduce its over-all running cost. The general manager of Trustbank Canterbury, Mr Frank Dickson, said the bank did not charge for minimum balances on savings accounts as did Trustbank Wellington. They were autonomous banks. However, the bank was finding increasingly that it could no longer provide all its services for nothing. Mr Dickson said that all financial institutions were facing the same problem — the need to have a user-pays philosophy. He said the bank was finding it could no longer afford to run convenience accounts — those accounts with a nil balance but a large number a transactions. Trustbank was not withdrawing from being a people’s bank; it was just unable to cross-subsidise any longer. A cross-sub-sidy meant that if someone did not pay at the point of use, then someone else paid at another point.