I flicked on the television a few weeks ago and started watching one of the current affairs programs that follows the evening news. They interviewed an old pensioner who had managed to save $75 dollars and put it away in a savings account. When she came to access the account six months later she found that there was only $50 left — the rest had been absorbed in bank fees. I felt a sense of outrage at what seemed to be an insensitive abuse of power by an unfeeling bureaucracy.
Shortly after watching this program, I had cause to contact my bank to arrange what I thought was a fairly straightforward matter. I wanted to increase my business overdraft from $10,000 to $15,000. ‘Yes, that shouldn’t be a problem’, came the response from the business banking manager I deal with, ‘But I’ll have to get you to sign some documents and provide us with an up to date statement of position (a summary of my assets vs liabilities)’.
I waited for two weeks for the documents to arrive and when they failed to appear I began to get annoyed and phoned my bank manager to ask what had happened to them. ‘I prepared them a week ago, you should have them by now’, was his response. I waited another three days and still no documents. I phoned again.
He expressed his surprise and offered to drop the documents around to my home personally. ‘Now we’re getting somewhere’, I thought, ‘personalised service; I haven’t seen that for ten years. They must be getting their act together and realising the importance of small business’. I figured the opportunity to meet the voice on the other end of the telephone would also be a good opportunity to cement a relationship with the bank.
He seemed like a nice bloke — kind of human and down to earth. I even dragged out the good coffee. We chatted about banking and business and about how hard it was to survive in either. He told me he had about 700 business accounts to oversee and how a lot were struggling. I told him about my business and how, like most others we have periods where things are tight — hence the overdraft increase. He left me the documents. Among them was a document increasing my personal guarantee for the business debts a further $5,000, and another to be signed by my solicitor after he had explained to me what a guarantee was.
‘Bloody hell’, I thought, ‘I know damn well what a guarantee is, I’m not stupid and I’ve studied law. Besides, I’ve already had my solicitor sign one of these when I established the overdraft and he charged me $70 for the privilege. The bank’s gonna end up with a filing cabinet full of solicitors affidavits about the same thing and it’s gonna cost me a fortune’. I made a note to ring him to protest.
Before got around to calling him, I received a letter from him confirming the rules of the newly inflated overdraft. I read it and couldn’t believe what I discovered on page four — in the section detailing the fees involved. Cop this: bank fees (lodgement of documents) $80, stamp duties $14, application fee $250, overdraft line fee $140 per year, plus an unspecified account keeping fee (please consult your branch). A minimum of $484 up front to increase the overdraft $5,000! ‘Jeeeeeeeeeeezus’. Oh, yes; and don’t forget the interest on the overdraft — 13.9%. To add insult to injury my solicitor wanted to charge me a further $100 to sign the guarantee thingo.
I hit the phone with a vengeance. The man who had shared my coffee and sadly reflected on the difficulties in running a small business remained unmoved. ‘I’m sorry, those are the charges and there’s nothing I can do about it’. I figured that for my own self esteem the least I could do was to ruin his day, so twenty years of copping crap from unreasonable hospitality customers and teaching assertive communication came in handy — to no avail I might add, but I did feel better afterward.
I asked a friend of mine who works for the Bank how long it takes a manager and the staff to process an increase in overdraft through their system. He said it varies on the complexity of the account and the customer’s history, but in my case the transaction is very straightforward and the whole lot should take about 15 minutes. This means the bank is charging it’s time out at the equivalent of $800 per hour. In the case of my solicitor the stats are even more impressive — to deal with the guarantee affidavit took five minutes — the equivalent of $1,200 per hour.
Have I missed something? I have hospitality business owners gnashing their teeth and wailing at the $150 per hour I charge to give them back control of their lives, meanwhile they are being financially raped and pillaged by their banks and solicitors. It’s a cruel and unjust world we live in folks.
So I have sympathy for the person on that current affairs program, cause they’re doing the same thing to me (and you). There’s not a lot you can do; they’ve got a monopoly on the cheque payment system and if you want to use cheques you’re stuck with them and their outrageous fees. In the olden days they new how to deal with the problem. They just burned moneylenders who charged too much at the stake. They called it the crime of usury.
Read the fine print folks, and check your bank statements carefully.