LETTER TO THE EDITOR

Dear Editor,

Federal Finance Minister Jim Flaherty has said this week that he has asked Canada's banks to give him reasons why they charge Canadians $1.50 as an Interac fee, and another $1 to $1.50 surcharge, to use another bank's bank machine.

Asking the banks about these two fees is only the first, small step that needs to be taken to end unjustifiable gouging of Canadian bank customers.

While such banking fees do not have to be banned, as NDP leader Jack Layton proposed this week, the federal government must require the banks to undergo an independent audit of their costs and revenues for every area of their operations in which they charge fees.  If the results of such audits show excessive profits in any area, then the banks should be required to lower their fees in that area.

The banks claimed the old $1.50 charge, known as the Interac fee, was needed to cover the costs of the computer network that allows all the machines to communicate with all the banks.

Until 2000, the banks only charged the Interac fee, and since then they have essentially doubled that charge to about $3.00.

It is highly unlikely that in 2000 the costs of the network suddenly doubled.  So why did the fee double?

It should also be taken into account that the banks have saved tons of money by closing hundreds of branches and firing thousands of staff over the past decade (with the Bank of Montreal just announcing the firing of 1,000 staff).

This systematic withdrawal of full-service banking has forced more and more Canadians to do self-service banking.  Usually when customers serve themselves, they pay a lower price -- but banking fees have perversely increased.

No business has a right to gouge, especially businesses providing essential services, and every survey in the past decade has found that 90 percent of Canadians believe having a bank account is a necessity, and a large majority also believe having a credit card is a necessity.

Federal finance ministers in 1988, 1995, 1997 and 2001 all talked about gouging fees and/or credit card interest rates charged by Canadian banks, but all of them chose to protect the six big banks from accountability instead of protecting 20 million bank customers from the gouging.

Federal Finance Minister Jim Flaherty showed how little he knows about federal banking law, and how little he cares about bank customers, when he subsequently said on January 29th that "The government, of course, does not regulate the day-to-day transactions of financial institutions with respect to fees and services" and indicated that the Conservatives will not regulate self-service banking machines charges.

Of course, the federal Bank Act contains all sorts of rules concerning bank fees and services (including rules requiring notice of fee increases, requiring banks to open accounts for anyone who meets specific criteria, and many, many more).

In addition, since 2000 the federal government has required through contracts all the banks to offer a low-cost, no-frills bank account to anyone who wants to open such an account.

What no federal government has done is to require banks to prove (through an independent audit) that all of their fees and charges are at levels that give the banks a reasonable, and not excessive, profit for providing various services.  Until the government requires such an audit, it will allow the banks to gouge Canadians as much as they want in as many areas of their operations as they want.

So while Finance Minister Flaherty is talking the same old talk, the key question is whether he will walk the walk and, finally, do something about unjustifiable banking fees.

Sincerely,
Duff Conacher, Chairperson
Canadian Community Reinvestment Coalition (CCRC)