From: Philip Johnston [mailto:scribepj@bigpond.com]
Sent: 24 June, 2015 12:55 PM
To: 'steven.lewis@acalawyers.com.au'
Subject: Class Action against Aust’s primary banking regulator since 1959

Steven

I refer to –

(i)              my CD submission to you dated 10 May 2015 regarding a Class Action against Aust’s primary banking regulator since 1959, which I referred to in my attached Intro Letter to you also dated 10 May 2015; and

(ii)             your letter to me dated 25 May 2015 [2 pgs].

Thank you for reviewing my submission and your reply letter.

My attached Intro Letter should have paid you the courtesy of informing you that I have not previously written to any other law firms.

I selected you over a year ago when you worked for Slater & Gordon.   

I then dragged the chain for too long.  When I finally got around to sending my submission to you, I became aware that you had changed law firms.

I will submit my CD submission to James Higgins in Melb, hopefully within 2 weeks, and also email James (two days after posting it) seeking to chat with him.

I think that the recently announced enquiry by Bill Shorten into credit card interest rates not having fallen in line with the cash rate adds weight to my assertions.

I believe –

1.    that files held by Financial Counsellors employed by Vinnies, Salvos, Anglicare ‘et al’ (funded by the Fed and State govts’ grants) provide patent evidence that many Credit Card Providers have discriminated against Australians with poor numeracy and literacy skills (Level 1 and Level 2 as identified by ABS and Productivity Commission reports);

2.    monthly credit card statements of the RBA Board Members, and senior executives of Credit Card Providers (with high numeracy and literacy skills), will evidence that theses ‘fortunate Australians’ have not contributed to the material delivery costs of the Credit Card System.

1. and 2. above thereby establish that the RBA Board has been “an accessory to the fact” of overt discrimination by some Credit Card Providers of a sector of the Australian population that is not equipped to –

(a)    detect misleading advertising; and

(b)    identify in up to 99 pages of Terms and Conditions documents in 9 font (deemed ‘Unconscionable’ by the ACCC) key points,

because Australia’s primary banking regulator –

a.    has ‘extensive powers’ to request any information from banks (that are Credit Card Providers) that the RBA wants to examine; and

b.    can set interest rate caps as the RBA did until -
*           1979 when passbook accounts were capped at 3.75%; and
*           April 1985 when the max interest rate charged on a credit card was 18%.

Finally, probably not unsurprisingly, it is difficult to obtain data on the ratio of revenue/profits enjoyed by Credit Card Providers drawn from -
a)         Merchant Service Fees (on the wholesale side); and
b)         Usurious Interest Rates and fees paid by too many Credit Cardholders (on the UNREGULATED retail side). 

However, I recently sourced the below article which ‘prima facie’ contends that AMEX operating in Australia, over last seven years, achieved -
*           36%  $2 billion from interest income; and
*           64%  $3.6 billion came from merchant fees.

SMH article - "American Express pays no tax on multibillion-dollar Australian operation for seven years" - June 11, 2015 - 3:49PM - Michael West

Credit card giant American Express has in effect paid no income tax on its multibillion-dollar operation in Australia for seven years.

An investigation by Fairfax Media and University of NSW accounting academic Jeff Knapp found its local arm, American Express Australia Ltd, even received a net tax gain of $3.3 million

That result came despite the company booking almost $8 billion in revenues from Australian customers since 2008. Of that total, $3.6 billion came from merchant fees and $2 billion from interest income on credit cards.

NB:      You might ponder why a retired, reasonably well off, infrastructure banker would expend many hours wanting to assist litigate the RBA for not performing its role as a regulator.  I have been lucky in life with the genes and the mentoring I rec’d from two ‘brill parents’.  Not all Australians are that lucky.  Parliament bestowed the RBA with extensive powers for a reason.  I evidenced the RBA flex it powers in my early career at CBA.

Regards