Ross Greenwood, David Koch and Paul Clitheroe slam banks over ‘unconscionable’ credit card lending – news.com.au - John Rolfe - Sept 1, 2015
FINANCE experts Ross Greenwood, David Koch and Paul Clitheroe don’t always agree — but they’ve just united to slam the banks over ‘unconscionable’ credit card lending.
ROSS Greenwood, David Koch and Paul Clitheroe have been friends and competitors for 30 years — sometimes colleagues. Today they were united in unleashing on banks over “unconscionable” credit card lending at a Senate Inquiry into plastic.
The three wise men of finance also had potential solutions to the $51 billion problem.
“Consumers have been done in the eye by the banks and their tactics,” Mr Greenwood, of Channel Nine, told the Sydney hearing.
Rates had not fallen due to growing competition or product transparency, he said. Fees had become a source of significant profit, tendering analysis comparing now to 1998 to support his claim.
“Credit cards have been a rort on so many different levels and generally it is the consumer getting skimmed,” said Mr Koch, of Channel Seven. Rates, surcharges and fees were unjustifiable.
‘Generally it is the consumer getting skimmed’ ... David Koch at the Senate inquiry into credit cards at the Sofitel Wentworth in Sydney.
Marketing dollars were spent mainly on the high fee, high rate, high profit cards. Mr Koch said. He recounted recently seeing a bus emblazoned with a bank credit card ad that said ‘buy fuel in Tamworth, fly to Thailand’.
“Where’s the advertising for the low-rate, low-fee cards,” he asked.
Banks were targeting the young. He said a Sunrise staff member’s apprentice tradesman son earning $25,000 had recently been offered a credit card with an $8,000 limit.
Mr Clitheroe — formerly of Nine’s Money show, the host of the Talking Money radio show and chairman of the Federal Government’s Financial Literacy Board — took aim at zero per cent balance transfer deals.
“They are a debt trap,” Mr Clitheroe said. Those who take out the deals were spending more than they earned and the banks knew it.
Beware the ‘debt trap’ ... Paul Clitheroe at the Senate inquiry into credit cards at the Sofitel Wentworth in Sydney.
Mr Greenwood called for standardised information for consumers and intervention targeting the vulnerable — those who don’t pay off their balances each month, unlike the better-off.
“Why do the poor subsidise the wealthy?” he asked.
And banks shouldn’t determine what constitutes responsible lending, as they currently do.
Mr Koch said banks should be prohibited from offering a credit card limit increase or new credit card. A customer should have to ask.
Consumers who have better credit histories should get better rates, he said.
“They can do it with insurance, why can’t they do it with credit cards?”
Calling for standardised information ... Ross Greenwood at the Senate inquiry into credit cards at the Sofitel Wentworth in Sydney.
And the minimum monthly repayment should at least cover the interest repayments on the balance.
Mr Clitheroe advocated for a public awareness campaign and for there to be more checks on balance transfers.
He said that if a person hasn’t been able to pay off their existing debts, “as a responsible lender how can you lend them more?”
The three men appeared side by side on a panel as part of the inquiry’s investigation of credit cards. The questioning was led by Economic References Committee chairman, Labor’s Sam Dastyari, along with Liberal senator Sean Edwards.