Surveyon 19 banks reveals rising and new fees and charges for wide range of services
A Consumer Council survey on 19banks in Hong Kong has revealed a fresh round of increased and new charges for awide range of services.
Bank charges have been on an upward trend in recent years as banks compete to launch new financial products.
Significant among the findings of the survey which compared fees and charges on services, commonly in use byconsumers, for December 1999 and December 2000 are:
- The great majority (15 out of 19) of banks have increased or introduced new charges or altered the fee structures.
- Remittance services were the most affected in this latest fee spiral.
- Inactive and/or low balance accounts were again the targets of fee increases.
- At least 80 new charges were identified across a broad spectrum of services.
- There were also 34 changes in the fee structures of various services resulting in increases in most cases.
- Disclosure of fees and charges was found to be generally inadequate, including notification on changes in bank charges and online disclosure.
Remittance Services
On remittance-related services, there were altogether 15 increases ranging from 14.3% to 100% on transactions that include: fund transfer (HKD via CHATS), telegraphic transfer, demand draft, foreign currency cheque collection and cash payment against remittance receipt.
There were also 7 new charges on remittance services originally available free to consumers.
Inactive/Low BalanceAccounts
7 banks were found to pay lower interest rate (e.g. reduced by 2-3%), or no interest at all to low balance accounts. On inactive low balance accounts, the survey found two banks raising the fee by 33% and 100% respectively; and one bank imposing a new fee for inactive period that exceeds three years.
Another bank was found to introduce a new fee for low-aggregate-balance in addition to the penalty already imposed on inactive low balance accounts.
New Charges
In addition, the survey uncovered a total of 80 charges across a broad spectrum of banking services that were imposed either on newly-launched products or services (67.5%) or previously free-of-charge services (32.5%).
In the former category, the new charges covered various services - general, accounts, deposits and withdrawals, remittances, mortgage and miscellaneous. These included, for instance, services in fund transfer (USD to local banks via CHATS), cash withdrawal via VISA PLUS/CIRRUS network, and provision of updated mortgage repayment schedule for tax purpose, etc.
In the latter, the charges fell mainly on the remittances and accounts services such as inward remittance credited to accounts with the same bank, returned cheques due to "other reasons", and the like; these are now no longer free.
Altering Fee Structure
The survey found also changes in the structures of fees and charges which, in most cases, resulted in consumers having to pay more. An example of such changes involved charges levied on consolidated accounts.
Instead of an annual fee of $480 for all account holders and a lower scale of monthly fee for average balance that falls below a minimum amount, a bank has raised both the monthly fee from $100 to $300 and the minimum average balance from $300,000 to $500,000. If a consumer is lucky enough to have a minimum average balance of $1 million, he or she is entitled to the service free.
Overall, the survey observed that in a bid to generate more non-interest income, banks have turned to raising fees and charges for services by expanding the types and scope of charges on consumers.
Disclosure of Information
Greater disclosure of bank charges is therefore essential to safeguard the consumer interest. According to the Code of Banking Practice, banks should give customers 30 days' notice before any variation of terms and conditions which affects fees and charges; and where the variation involves substantial changes to existing terms and conditions or the charges are very complicated, banks should provide a written summary of the key features of the revised terms and conditions.
Banks, nevertheless, varied in their disclosure practices. Some notify customers through their monthly statements or under separate cover.
Some, however, choose only to display the fees and charges on the premises of the banks. This practice is far from satisfactory as indicated in the complaints to the Consumer Council.
The Council strongly recommends that banks should, as a matter of good practice, notify in writing of any variation of fees and charges to all affected customers who could then be able to assess the impact and make the necessary informed choice.
In the survey, it was also found that of the 14 banks that operate e-banking, only 7 had online disclosure on their charges. This lack of transparency is urgently in need of improvement.
The Council also expressed concern on two other issues: (1) higher charges on dormant and low balance accounts affect particularly the less privileged and the elderly; (2) with the move towards e-banking, consumers who do not have access will be marginalized.
The Council is of the view that banking services are regarded a basic service in a highly developed economy such as Hong Kong's, the Council call upon the banking sector to avoid implementing measures that would further marginalize the disadvantaged in the community. Banks should recognise the benefits of providing the best possible service to the consumer as a means of competing with others in the sector.
Here are some advice to consu mers
(1) In choosing a banking service, consumers should take into account not just the interest rate but their fees and charges.
(2) Consumers should compare charges, check out information before using the service.
(3) Read bank statements and letters from banks for any announcement of any change in policy.
(4) Review the number of accounts you now hold. Only keep those that you really need. At least one bank has taken efforts in encouraging its customers to consolidate their accounts to preclude the need of their paying unnecessary charges.
(5) Be more careful to avoid paying charges for errors in making out cheques, inadequate balance etc.
Findings of the survey were published today (January 15) in the latest issue of the Council's magazine CHOICE.
Council warns on use of electric stewing pots as none can fully comply with electrical safety requirements
Electric stewing pots are out in force as the cool weather greatly induces the consumption of Chinese tonic food.
They are a favourite with Chinese who believe that tonic food cooked by 'slow' stewing method is good for the human body.
But the Consumer Council test on these stewing pots has a different message to put out: they are potentially hazardous to use due to inadequate electrical safety protection.
The test gave the thumbs down on all the 6 models common in household use. None could fully pass the safety standard of the International Electrotechnical Commission (IEC). One model was particularly problematic as it failed most of the test items.
Overall, most of the 6 models were found to fail to comply with the safety standard in respect of (a) temperature rise test, (b) leakage current test and (c) construction of the product.
Temperature rise exceeding the limit of safety standard for the transformer windings, internal wire insulation etc. could entail overheating under normal operation. In particular, excessive temperature rise on the handles might scald hands of users and cause injury of consumers when holding them.
Some (5) models were unsatisfactory in the Creepage Distances and Clearance test - the live parts were not separated by a sufficient separating distance that might potentially result in short circuit and flashover.
Some (3) had accessible metal parts not properly earthed posing hazard of nasty electric shock to the unwary.
Many (5) were also found with drain holes not in compliance with the required dimension, making it difficult for the water to drain away quickly from the holes when accumulated inside the base of the device.
The Consumer Council has forwarded results of the test to the Electrical and Mechanical Department for action it deems necessary under the Electrical Products (Safety) Regulation.
Suppliers of the products in question have reacted positively and took remedial action accordingly:
- 3 of the models in the test have since ceased to be supplied and residual stocks recalled from dealers and distributors.
- 2 models have undertaken to improve the safety features in accordance with the IEC safety standard.
Consumers are urged to use these products with the utmost caution. They should immediately stop using the appliance, in case of any abnormal signs such as overheating and arcing, and seek professional inspection.
Many scooters, particularly the cheaper models, are of a poor quality
Concerned about reports of mounting injuries sustained in scooter accidents, the Consumer Council has conducted a test on 15 locally available models.
The test revealed that with a few exceptions, most of these scooters are not designed and constructed to a high level of strength and durability.
Many models, particularly the cheaper ones, are of a poor quality or defective products. As scooters are popular with younger children, the risk is greatly increased by reckless riding (including, for instance, jumps, stunts and other rough treatment).
At least 10 cases of scooter-related injuries have been reported in Hong Kong within a relatively short period between March and July last year, according to the Council's records.
As not only small children but also adults could be riders of scooters, the Council has devised a test drawing on various standards for toys and sports equipment to test the construction and folding mechanism of the scooters.
Against this set of test criteria, only 3 models in the test were rated to be satisfactory. These scooters were at the more expensive end of the range priced at $888, $1,180 and $1,430.
The remainder 12 models all had 1 or up to 4 aspects rated unsatisfactory in the tests. Many of them were available for under $300.
Tests on the construction of the steering column, footboard and folding mechanism revealed a long list of defects that included deformed locking device and brake mechanism, faulty front wheel fork stem failing to keep the handlebar securely in place, front wheel spindle becoming loose from the front fork, cracked wheel hub, etc.
Such defects could cause the rider to lose control, fall and possibly suffer injuries. Most injuries associated with skate scooters involved fractures, cuts and abrasion, or in more serious cases, head injuries that could result in brain damage.
While scooters are fun to play with, parents should be wary of the risk inherent in such game. They should keep their children, the younger ones in particular, under close supervision and watch out for any signs of defects of the scooters.
In the interest of their children's safety, the use of helmets, with knee and elbow pads are highly recommended.
Therapeutic claims by "far infra-red" and "negative ions" products are questionable
You may not have the slightest clue about what "far infra-red radiation", "negative ions" are all about.
But these unfamiliar, hi-tech sounding claims have increasingly found their way on the label of many a consumer product - beddings, apparels and household appliances.
These products which claim to have therapeutic effects are usually sold at prices higher than those of similar goods - some as much as tens of thousands of dollars.
The Consumer Council has received consumer enquiries and complaints, too.
The truth is, according to expert advice from healthcare professionals and scientific researchers, any object in this world can emit infra-red radiation.
In their normal practice, physiotherapists may use devices that release infra-red radiation - but not "far infra-red radiation". When such devices are used, they are carefully controlled by medical professionals during the treatment.
More importantly, all infra-red devices used by medical professionals need external source of power (such as plugging into the electricity supply). It is therefore highly dubious that whether those health products that do not need power supply can release sufficient amount of "far infra-red" radiation to produce the medical effect claimed.
Some such devices even claim that they can turn ordinary tap water into water that can prevent cancer or alleviate gout, and the far infra-red radiation can penetrate deep into the body to perform "detoxifying" functions. But such claims lack substantiation with recognised academic authorities.
Devices claimed to release negative ions are often promoted to have the effect of reducing pollutants in the air.
Separately, a report of the Environmental Protection Agency of California indicated that a type of personal air purifier which claims to release negative ion, may actually increase the amount of ozone inhaled by the user. A high concentration of ozone can be toxic.
The elderly are particularly vulnerable to persuasive sales tactics of such so-called health products. Younger members of the family should pay more attention to the health of their elderly and whenever possible accompany them to consult a physician when the need arises. We should discourage our elderly to buy products of unproven medical values. Otherwise, their health may suffer because of these products.
Complaints against undesirable "opt-out" sales practice
Complaints have been received against an insurance firm and a credit card company for engaging in undesirable "opt-out" sales practice.
Such trade practice generally involves offering unsolicited goods or services to customers who will be deemed agreeing to the offer if they do not choose to opt out of the deal.
The complainants were dissatisfied with this promotional sales practice considering it unreasonable and unfair as they were unaware and had never given their express consent to agreeing to the purchase or the use of service.
In the case of the insurance company, the complainants received a bill for premiums which included not only the original premium but premiums for new additional insurance policies promoted by the insurer.
The bill, however, did not clearly differentiate the original and new premiums nor specifically seek the consent of the insured. Instead, according the complainants, the sum of the original premium was found in small print on the back of the bill while the new premium appeared on the front.
The complainants claimed that they were confused by the presentation of the bill at the time of payment and realised the mistake only afterwards.
On the intervention and advice of the Consumer Council, the insurance company concerned has made the necessary amendments to its notice for payment of premium and invoice to clients.
In the case of the credit card company, a complainant received a notice from the Post Office to collect a registered mail, which turned out to contain a platinum credit card which he never applied for.
Upon enquiry, he was told that the bank had earlier mailed him an invitation to apply for a pre-approved platinum credit card. And that had he wanted to decline the offer, he was needed to notify the company of his refusal and only then would the company not mail him the credit card.
Utterly dissatisfied with such sales tactic, he destroyed the card instantly and lodged his protest with the company - and later complained to the Consumer Council when the company failed to address the issue to his satisfaction.
The complainant deemed the company had, without his consent, abused the use of his personal data. And as the credit card was sent by registered mail, he had to take leave during office hours to collect it causing him extreme inconvenience. He wanted the Council's advice on the practice of this bank.
The Council has referred the case to the Monetary Authority as in accordance with the Code of Bank Practice, banks should issue new credit cards only on the request of their customers. After repeated urging of the Council, the bank concerned has agreed to adhere to this provision in the code.