Call for cut in bank charges

Beijing Consumer Association called on government bodies Monday to cancel some unreasonable charges by commercial banks in order to protect consumers' interests.

The association wrote a letter to the National Development and Reform Commission, the China Banking Regulatory Commission (CBRC) and the central bank Monday, lobbying them to order commercial banks to cancel some unfair charges such as punitive interest rates on overdue credit card payments, management fees for small-sum personal banking accounts, as well as transaction fees for non-local withdrawal of pensions.

The suggestions are based on 373 feedback comments from consumers submitted between May 21 and July 1.

"It's the first time for a consumer association to publicly criticize unreasonable bank charges," Dong Zhengwei, a lawyer at Beijing Lianggao Law Firm, told the Global Times.

Dong said opaque and unfair charges have been a major source of public complaints regarding the country's banking sector for years, but there are only a few laws and regulations for the protection of consumer rights in the area of financial services.

"The association's suggestions should not only represent certain groups such as retired people, but should cover a broader consumer group and more unfair charges such as annual fees for bank cards," he said.

The CBRC began an investigation into bank fees on April 1, and said banks that were found to be charging excessive fees for routine services would be punished.

As a result, some banks cancelled some of their charges. Bank of China, for instance, reported a 2.07 percent year-on-year decrease in transaction and commission charges in the first half of 2012, but its net profit still rose 7.58 percent year-on-year during the period.

"Commercial banks' main source of profits is the difference between deposit and loan interest rates, so eliminating some services charges would not hurt their interests that much," Dong noted.

Zhang Guoqiang, an analyst at industry website bankrate.com.cn, also told the Global Times that canceling some charges would not be bad for commercial banks.

"For example, removing the punitive interest rates could stimulate consumers' use of credit cards," he said. "Some big banks such as the Industrial and Commercial Bank of China have already lowered their rates, and other banks will wait and see its effect."

A new rule aimed at regulating the service charges of commercial banks is expected to come into effect in 2013. According to the draft rule, bank subsidiaries will not be allowed to set their own charges and all service fees must be decided by their head offices.

But the association said that would not be enough. It suggested that a public hearing system should be introduced to target bank charges that concern large numbers of consumers.

Beijing Banking Association responded that it would make efforts to deal with complaints from consumers, and order member banks to improve their services, according to a report published Monday by the Beijing News.