Banks warned of GST price watch

The Australian Competition and Consumer Commission will closely scrutinise any increases in bank fees and charges due to the Goods and Services Tax, the ACCC warned today.

ACCC Chairman, Professor Allan Fels, said the ACCC expects to hear in advance from major banks contemplating price adjustments due to the new tax system and has held consultations on GST matters.

"Any banks attempting to raise prices significantly as a result of the GST will immediately be investigated", he said.

"GST does not generally apply to bank fees and charges".

There will be, however, some cost increases for banks as a result of the GST applying to the prices of certain goods and services that they purchase and use as inputs. There will also be some cost savings. Any bank price adjustment on this account would need to take account of cost savings for example on computers, as well as cost rises.

"At this stage bank costs have not been investigated but any rises are not expected to be near 10 per cent in general.

"Should there be any attempt by banks to charge excessive fees, they would face massive penalties, as well as further damage to their current image".

A claim reported in some parts of the media that bank fees and charges would rise by 30 per cent clearly misunderstands the situation.