Amidst the furor over the Westpac decision to charge interest on credit card balances’ interest and fees, consumer group Choice has found that most Australian banks would not be in compliance with the new regulations being passed in the U.K.

The new U.K. regs, which are forecast to save credit card users $800 million each year, include:
•    a ban on credit limit increases not requested by the customer;
•    a requirement that customers can reject interest rate hikes; and
•    a requirement that repayments be first applied to the section of the balance that’s drawing the highest interest charges.

“Most of the practices to be outlawed in the U.K. are standard practice for Australian banks,” said Alan Dooley, a Choice representative.

A representative for the Financial Services Ministry stated that the department is monitoring the regulatory changes in the U.K. and added that at least one new Australian regulation, a ban on credit limit increases not requested by the customer, was in the works.

Treasurer Wayne Swan expressed outrage over the Westpac decision to charge interest on interest and fees, commenting that such behaviour was why the big banks were so unpopular.

“There are other credit cards that don’t charge interest on fees,” he said, “and no doubt many Westpac customers will be considering those today.”

Recent Choice research shows that credit cards not charging interest on interest nor fees are offerred by Heritage Building Society, Teachers Credit Union, and Bendigo Bank. These financial institutions’ credit cards are also less expensive than those offerred by many of the big banks, in some instances as much as 80% less expensive.

Coincidentally, yesterday data released by the banking regulator, Australian Prudential Regulation Authority, calculated that the big banks charged their customers $45 billion for interest in 2009.

Source: http://www.dailytelegraph.com.au