Ruling on bank charges complaint due next week

The Office for Fair Competition is next week expected to decide whether to take action against HSBC following the much talked about introduction of new bank charges last year.

Marcel Pizzuto, director general of the Consumer and Competition Division (CCD), would not, however, hint what decision would be taken, more than a year after the Malta Financial Services Authority requested an investigation into the new charges.

The issue in question concerns HSBC's decision to impose a 75c charge on pension cheques issued by the Central Bank and the introduction of a Lm4 administration fee if the average of the combined balances of an account holder's savings and current accounts does not exceed Lm75.

The charges came into effect in April and July last year respectively.

At the time, the MFSA had expressed surprise at the new charges and requested the Office for Fair Competition to see whether they were in accordance with the provisions of the Competition Act. The authority had said it was "displeased" with the charges and their method of implementation.

Charges for bank services, including administration charges for the opening, retention and closure of bank accounts, are not regulated under the Banking Act.

Mr Pizzuto defended the lengthy process saying an economic and legal analysis needed to be taken into consideration before a decision could be taken.

Among others, the CCD studied whether there was an abuse of the bank's dominant position.

Mr Pizzuto said the division investigated whether the increase in charges was balanced out by an improvement in services.

Should the bank be found to be in breach of the Competition Act it would have the right to appeal to the Commission for Fair Trading. If the commission sticks to the decision, the bank would have to stop the charges or face hefty fines of one to 10 per cent of turnover.

HSBC public relations manager Josef Camilleri defended the bank's new charges saying they were justified as new services more than made up for such charges. Besides, HSBC was providing more than enough alternatives to enable customers to avoid the charges.

Among new services, last year the local banks made arrangements to enable customers to use each other's ATMs. HSBC has also created an ATM account to dissuade people from going to branches.

Mr Camilleri said the decision to introduce a Lm4 administration fee if the average of the combined balances of an account holder's savings and current accounts did not exceed Lm75 helped to reduce hundreds of dormant accounts.

Customers with youth, student scheme, fixed deposit, Karus, and customers with approved borrowing facilities were exempt from these charges.