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Defined Terms and DocumentsWritten Questions (re Credit Cards)
Snapshot of Question 1: Four Pillars provide data for a month (or qtr) of - * number of Credit Cardholders that repaid five different percentages of indebtedness and aggregate dollar amount of those repayments * aggregate and the percentage of gross interest revenue paid by the highest paying 20% of Interest paying Credit Cardholders Will the Federal Treasurer seek the Governor of the Reserve Bank, to exercise its "...extensive powers...." under the Payment Systems (Regulation) Act 1998 to obtain information for - (A) a particular month (or quarter) no later than 30 June 2017 from the Four Pillars which shows: 1. Number of Credit Cards that repaid total indebtedness and aggregate dollar amount of those repayments. 2. Number of Credit Cards that repaid > or =50% of total indebtedness and aggregate dollar amount of those repayments. 3. Number of Credit Cards that repaid <50% but >5% of total indebtedness and aggregate dollar amount of those repayments. 4. Number of Credit Cards that repaid <=5% of total indebtedness and aggregate dollar amount of those repayments. (B) aggregate and the percentage of gross interest revenue that is paid by the highest paying 20% of Interest paying Credit Cardholders to assist appraisal of the application of the User Pays Principle for Credit Cardholders that hold over 16 million Credit Cards in Australia (ie. the highest Interest paying 20% of Credit Cardholders for a particular Pillar Bank may be paying 60%, 70% or 80% of all interest receipts for the selected month or quarter).
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Snapshot of Question 2:
As the RBA retains the 'extensive powers' under Section 50 of the Banking Act 1959 to set deposit and loan interest rates that it relied upon to set interest rates for commercial bank accounts and credit cards up until 1980, will the RBA re-introduce the 18% cap that existed until the RBA removed it in 1985? Will the RBA explain why the Payments System Board's 'Responsibilities and Powers' do not also list the Banking Act 1959 under legislation that governs the Payment Systems Board's responsibilities and powers.
Will the Federal Treasurer ask the Reserve Bank that as it retains the 'extensive powers' under Section 50 of the Banking Act 1959 that it relied upon to regulate the maximum interest rates that Australian commercial banks could - (i) pay (from 1969 to 1980) on savings bank passbook accounts at 3¾% and on savings investment passbook accounts at 6½, (ii) charge on overdrafts until February 1972; and (iii) charge on Credit Cards capped at 18% until April 1985, to now re-regulate/cap the maximum interest rate for Purchases and Cash Advances on Australia's 16.1 million Credit Cards? The highest interest rate on a Credit Card offered in Australia for Purchases is presently 25.9%. The highest interest rate offered in Australia on a Credit Card for Cash Advances is presently 29.49% These are Usurious Interest Rates unashamedly targeted at Australians with poor Numeracy and Literacy Skills (by Predatory Advertising) identified by the Reserve Bank as Revolvers that hold 33% circa of the 16.1 million Credit Cards on issue in Australia as at Oct 2016. Casual empiricism indicates that Persistent Revolvers, identified by the RBA Submission to the Senate Inquiry into Matters Relating to Credit Card Interest Rates - Aug 2015, hold a mere 12.58% circa of these 16.1 million Credit Cards, yet Persistent Revolvers incur 80% circa of all Interest and Penalty Fees Revenue levied by Credit Card Issuers. Pursuant Section 10(2) of the Payment Systems (Regulation) Act 1998, and relying on Section 50 of the Banking Act 1959, will the Federal Treasurer ask the Reserve Bank to - (A) re-regulate the 18% cap on Credit Card interest rates that applied up to April 1985 to apply to Cash Advances on the basis that the '16.5% Differential' [between the Overnight Cash Rate (as at 27 Feb. 2017) of 1.5% and the 18% 'Cap On Credit Card Interest Rates' (for Purchases and Cash Advances)] could be 'locked in'; and (B) regulate the maximum interest rate for Purchases to be 15% p.a., whereupon if the Overnight Cash Rate increased to say 3%, the 'Cap On Credit Card Interest Rates' could increase to 19.5% p.a. ('16.5% Differential' + 3%) for Cash Advances and 16.5% p.a. for Purchases. Will the Federal Treasurer ask the Reserve Bank why the Payments System Board's 'Responsibilities and Powers' do not also list the Banking Act 1959 under key legislation that governs the Payment Systems Board's responsibilities and powers? Background to Question 2 Chapter 5 notes that prior to 1985, the maximum rate that could be charged on credit cards had been set at 18% pa by the Reserve Bank. In April 1985, this rate cap was deregulated. In June 1992, seven years after the Reserve Bank removed the 18% cap on Credit Card interest rates, the Reserve Bank issued a Discussion Paper titled: LOAN RATE STICKINESS: THEORY AND EVIDENCE - RBA 1992 written by Philip Lowe and Thomas Rohling. That Discussion Paper evidences: A). The 'iron fist control' that the Reserve Bank had over setting the maximum commercial bank interest rates, both deposit and lending, until deregulation commenced in 1980, whereupon the money lenders began their 'Spinning; and B). that the price elasticity between variations in the wholesale cost of funds (Overnight Cash Rate) and changes in Credit Card interest rates was exceedingly Sticky when the (Overnight Cash Rate) fell. The Defined Term, Persistent Revolvers (identified by the Reserve Bank in 2016) establishes that - * Revolvers represent 33% of all Credit Cardholders * Persistent Revolvers represent 38% circa of the 33% of Credit Cardholders that are Revolvers * Persistent Revolvers pay 80% circa of all Interest and Penalty Fees Revenue levied by Credit Card Issuers. The findings in the afore-mentioned historic Discussion Paper have been reproven in a dozen or so subsequent Reserve Bank Copious Publications on Credit Cards in the subsequent 25 years that - (A) Transactors have been the big beneficiaries from the Reserve Bank removing the 18% interest rate cap on Credit Cards in 1985 because the 63% circa of Credit Cardholders that are Transactors enjoying a Free Ride, and (B) Persistent Revolvers have paid a hefty price because the User Pays Principle has been further eroded by 'Sweets', 'Sours' and 'Spiders' explained in Chapter 3, which include Predatory Advertising and deceitful disclosure of hidden costs in Credit Card Terms and Conditions booklets (up to 92 pages in 9 font) which a Credit Card Issuer recommends that all card users should read it in its entirety - see Chapter 1. Below is an extract from Chapter 5:
Chapter 15 notes that Section 10(2) of the Payment Systems (Regulation) Act 1998 states:
---------------------------------------------------- Snapshot of Question 3: Do the states and Commonwealth Govt. that fund $43m to 44 charities circa annually obtain data (from these community organisations) of the number, indebtedness and demography of Credit Cardholders that these community organisations try to assist? Does Commonwealth Financial Counselling services or any of the State governments that collectively fund $43 million annually to pay for Financial Counsellors at Australia's major charities require these community organisations (or at least the larger community organisations) to provide periodic returns/reports to these Government agencies which inform 'inter alia' the - 1. number, indebtedness and demography of the Credit Cardholders (which may include a husband and wife collectively) that the Financial Counsellors are assisting; and 2. number of Credit Cardholders that are carrying Credit Card Debt Accruing Interest over the following brackets of indebtedness and the average number of Credit Cards that the Credit Cardholders in these six segments carry indebtedness?
Will the Federal Treasurer request the Federal Govt. and State Governments agencies that fund $43m annually for financial counselling to provide the above statistical data on the - A.) number of Credit Cardholders; and B.) aggregate number of Credit Cards held by these Cardholders, that carry the above categories of aggregate Outstanding Indebtedness for a sample month, quarter or year to the Federal Treasurer for presentation to the Commonwealth Parliament annually, commencing by 30 Sept 2017, and list the community organisations that provided this numeric data. Grounds for Question 3 Chapter 7 notes that "Total funding from governments in Australia for financial counselling service delivery is $43 million per annum." The Federal Govt. funds $20m and the State Govts collectively fund a further $23m to 44 circa community organisations throughout Australia annually towards the salaries of approx. 500 Financial Counsellors that provide financial counselling, ostensibly to Australians carrying high Credit Card Debt Accruing Interest and others also suffering a gambling addiction. ---------------------------------------------------- Snapshot of Question 4: Was Dr. Malcolm Edey (now retired from RBA) correct when he asserted that the ACCC is responsible to investigate interest rates charged by some Credit Card Issuers and by implication that the RBA is not responsible to investigate credit card interest rates? Question 4 Below is a extract from the Senate Economics Reference Committee report "Interest rates and informed choice in the Australian credit card market - Dec 2015:
Mindful of -
(i) the above-mentioned duty of the Reserve Bank's Board, and the fact that Reserve Bank stringently regulated interest rates, relying on Section 50 of the Banking Act 1959 (noted in Question 2), in particular capped credit card interest rates at 18% until 1985; and
(ii) the ACCC website clearly notes that "..it has an agreement with ASIC that ASIC oversees the majority of bank and financial service product and services providers.",
was Dr. Malcolm Edey correct in Dec. 2015 when he told the Senate Economics Reference Committee that the ACCC is the designated regulator to "... investigate uncompetitive conduct..." regarding "...credit card interest rates...", thereby implying that the Reserve Bank is not responsible to investigate credit card interest rates for "the economic prosperity and welfare of the people of Australia"?
Grounds for Question 4Re Dr. Edey's above comment about the ACCC ".....can investigate uncompetitive conduct if they see it, but they clearly have not seen it in this market''.The ACCC website notes: "The ACCC regulates anti-competitive behaviour. However, it has an agreement with ASIC that ASIC oversees the majority of bank and financial service product and services providers." The Writer's email to RBAInfo sent 16 March 17 included: "Am I correct that ACCC has had no responsibilities re credit cards since 23 Feb. 2004 when the RBA ‘set standards’ under its newly created Access Regime for MasterCard/Visa?" 18 April 17 included:"It is not correct to say that the ACCC has no responsibilities in relation to credit cards. In addition to the Memorandum of Understanding cited, there is a short description of the role of the ACCC on the RBA website: http://www.rba.gov.au/about-rba/boards/psb-board.html#withACCC" Section 10(2) of the Payment Systems (Regulation) Act 1998 says:
Below is Reserve Bank Act (1959), Part II, Section 10 ''Functions of Reserve Bank Board":
Point 1. of Extensive Powers notes that the BANKING ACT 1959 - SECT 50 "Control of interest rates" that the Reserve Bank may, with the approval of the Treasurer, make regulations that make provision for or in relation to the control of rates of interest payable to or by ADIs. Watchdogs quiet as banks gouge credit cards - Daily News - 2 June 2015
---------------------------------------------------- Snapshot of Question 5: Do any/some of the Nine Examples represent Predatory Advertising or Unconscionable Conduct as defined by the ACCC? Question 5 Will the Federal Treasurer request the relevant Regulator/s to - (i) examine the information in advertisements for Credit Cards (explained in the Nine Examples within Labyrinth of ‘Concealed Spiders’) with particular regard to obligations under the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Act 2011, to determine if any represent Predatory Advertising or Unconscionable Conduct (based in the ACCC's description of (Unconscionable Conduct); and (ii) impose monetary penalties if either of the above offences are found to have occurred. ---------------------------------------------------- Snapshot of Question 6: Does the recommendation by St George Bank that you should "read this booklet carefully", the direction by ANZ to read its booklet in its entirety and the instruction by Westpac to READ YOUR CONTRACT constitute Unconscionable Conduct as the terms and conditions documents/booklets are 62 pages, 97 pages and 43 pages respectively in small font? Question 6 Will the Federal Treasurer request the relevant Regulator if the immediately below recommendation by St George Bank and the further below instructions from ANZ and Westpac constitute Unconscionable Conduct as defined by the ACCC (refer Chapter 1) having regard to separate reports by the Productivity Commission (Staff Working Paper "Links Between Literacy and Numeracy Skills and Labour Market Outcomes" dated Aug 2010) and the ABS (4228.0 - Adult Literacy and Life Skills Survey, Summary Results, Australia, 2006 (Reissue) that indicate that up to 50% of Australians do not possess the Financial Literacy skills beyond Level 2. Yet level 3 is regarded by the survey developers as the ‘minimum required for individuals to meet the complex demands of everyday life and work in the emerging knowledge-based economy’: * St George Bank "We strongly recommend that you read this booklet carefully and retain it for your future reference" a 62 pages Conditions of Use - Credit Guide document of Conditions where 60 pages are written in tiny 8.5 Helvetica font. The word 'interest' appears in the 'Contents' twice and 77 more times throughout the 62 pages. The word 'fee' or 'fees' appears 53 times. * ANZ's 'CONDITIONS OF USE 20.06.2016 CONSUMER CREDIT CARDS' - 97 page booklet printed in Arial 9. The word "interest' appears 216 times in the booklet. The word 'fee' or 'fees' appears 104 times. "The following summary is designed to highlight some of the important information about your credit card account and to help you identify where to find further details within this booklet. The summary is not a substitute for the terms of Parts A and B of this booklet, which you should still read and understand." * "Ignite by Westpac - Consumer Credit Card Conditions of Use". The word 'interest' appears in the 'Contents' once and 92 more times throughout the 43 pages. The word 'fee' or 'fees' appears in the 'Contents' once and 74 more times throughout the 43 pages. "This User Guide forms part of your Credit Card Contract, along with the information set out on the reverse of your welcome letter which advises you of your credit limit and other prescribed information we are required to give you by law." Clause 17 is "Do I have any other rights and obligations?" "Yes. The law will give you other rights and obligations. You should also READ YOUR CONTRACT carefully."
---------------------------------------------------- Snapshot of Question 7: Will the Four Pillars each introduce a new "lower interest, lower fees, new fees" Credit Card that accords with the User Pays Principle? Question 7 Chapter 10 contains various quotes from the four CEOs that were each questioned in Oct 2016 by the House of Representatives Standing Committee on Economics - Review of Australia's Four Major Banks that include.
Shane Elliott, CEO ANZ said:
Ian Narev, CEO CBA said: “I said we came in here with a spirit of openness and listen to suggestions and we will, .....” Consistent with the above comments from two CEO's, would the Federal Treasurer request the Governor of the Reserve Bank to rely upon its 'extensive powers' to request each of the Four Pillars to introduce a new "lower interest, lower fees, new fees" Credit Card that applies the User Pays Principle with the following features:
1. Annual Credit Card Fee of $26. 2. Purchase Interest Rate @ 1,350 basis points above the RBA Overnight Cash Rate. 3. Cash Advance Interest Rate @ 1,650 basis points above the RBA Overnight Cash Rate. 4. Cash Advances limited to 50% of the Credit Limit. 5. Concessional Interest Rate Period @ 1% up to 50 days charged from the date of each Purchase (to replace the Interest Free Period up to 55 days) to cover the high cost of Fraud, as well as reduce the funding cost upon Persistent Revolvers. SMS and email notifications and internet banking enable Credit Cardholders to pay their monthly repayments within a few days of notification of their 'Total Monthly Purchases'. 6. Purchase Usage Fee of $0.50 for each Purchase. 7. Lost Card Fee of $20 for - * placing a stop on an account; and * issuing a replacement Credit Card(s). 8. Minimum Monthly Repayment 25% of the Total Amount Owing each month - Credit Cardholders may contact their Credit Card Issuer and request their Credit Card Issuer to reduce the Minimum Monthly Repayment to as low as 5% (for up to two years dependant upon the normal parameters governing an Unsecured Personal Loan application. 9. Assign the Credit Limit based on the Credit Score of the Credit Card applicant by obtaining a Credit Report from all three of the Credit Reporting Agencies (Veda, Dun & Bradstreet and Experian) which thereby will establish 'inter alia' the number of Credit Cards already held by the applicant and the aggregate Credit Limits. 10. Limit school leavers from 18 years to receive a Provisional Charge Card ("PCC") [not a Credit Card] for the initial six months, thereby necessitating the Total Amount Owing to be repaid at the end of each monthly cycle or be subject to late fees and restrictions on future PCC use, with deferment of receiving a traditional Credit Card until the PCC holder complies with the PCC repayment obligations for 6 months without breach, in order to establish their Credit Rating. Then (after six months of repaying the Total Amount Owing each month in arrears) replace their PCC with a Credit Card with a prudent Card Limit which could be increased no more than once a year based on the Credit Cardholders' Credit Rating? Grounds for Question 7 Re 1. above, prior to August 1993, the various State Credit Acts prohibited most Credit Card Issuers from charging an annual fee if they charged interest on credit card purchases (e.g. Credit Act 1984 (NSW) s 54). Following a recommendation from the Prices Surveillance Authority’s 1992 "Inquiry Into Credit Card Interest Rates", State legislatures issued exemption orders which allowed all financial institutions to charge both interest and fees on Credit Cards from 1 August 1993.
Re 2. and 3. above,
Prior to 1985
the maximum rate that could be charged on credit cards had been set at 18% pa by
the Reserve Bank of Australia. In April 1985, this rate cap was deregulated. Re 4. above, the primary purpose of a Credit Card is to validate the 'Creditability' of the Cardholder when making a Purchase/s. Re 5. above, Diners Club and American Express' offer of an Interest Free Period as an lure when marketing their 'new fangled' Credit Cards in the early 1960's has proven to be a marketing 'master stroke'. The attraction of an Interest Free Period has enabled Transactors to contribute very little to the costs of credit card schemes as noted under point 6 of 'Introduction' of RBA's Consultation Document titled Executive Summary - Reform of Credit Card Schemes in Australia: RBA's "A Consultation Document" – December 2001:
Re 6. above, Credit Card Issuers incur a funding cost for up to 55 days, which is partially funded by Merchants paying a Merchant Service Fee (Interchange Fee and Acquirer Fee) that pass onto the Cardholder. Chapter 18 notes that the Australian Retailers Association argued that the contract is between the Card Issuer and the Cardholder (not the Merchant) and the Card Issuer should charge a Cardholder an "activity based fees". Re 7. above, McKinsey Report - May 2014 categorizes 'Five Segments' of Credit Cardholders in the USA. Below is an extract from the 'Third Segment', namely 'Financially stressed':
Re 8. above, the original Charge Cards required the total monthly spend be repaid at end of month. Australian Governments allocate $43 million annually to 44 Australian charities to provide financial counselling to Australians That Are Experiencing Extreme Financial And Emotional Distress. Encouraging Credit Cardholders to only repay as little as 2½% evidences Credit Cardholders incurring interest as high 29.49% and forfeiting their Interest Free Period for up to two further months - Unconscionable Conduct as defined by the ACCC. Re 9. above, Financial Counsellors have assisted distressed Credit Cardholders owning and using over 10 credit cards and have a Total Amount Owing over $150,000. The ANZ CEO, Shane Elliott, commented: "I think with new technology and new risk management it is going to be easier to offer more targeted [pricing]. I think that is going to come and I think that will be part of the disruption that will come... to allow more risk based pricing in cards."Re 10. above, encourages 'good habits' and not 'bad habits'. School leavers are required to "put training wheels on". In 2004, the Commonwealth Bank Foundation commissioned research to investigate peoples' ability to make informed and responsible financial decisions and examine the relationships between financial literacy and its impact on individuals. Lower financial literacy scores were directly related to respondents having been unable to pay their mobile phone, utility and credit card bills in the last 10 years. The Foundation's 'Profile of the least financially literate' included students (29.6 per cent). ---------------------------------------------------- Snapshot of Question 8: Will the Governor of the Reserve Bank explain to the Federal Treasurer why it allows Credit Card Issuers to charge as low as 0.20% and as high as 2% to perform identical Interchange Fee services? Question 8 RBA's recent Review of Card Payments Regulation - Conclusions Paper - May 2016 - Section 3.4.9 Implementation timeline noted that - (i) the weighted-average benchmark for Visa/MasterCard credit cards -(A) of 0.50 per cent will be maintained (B) will be supplemented by a ceiling (on individual interchange rates) of 0.80 per cent (ii) to prevent Interchange Fees drifting upwards in the manner that they have previously, compliance with the benchmark will be observed quarterly rather than every three years. Visa or MasterCard will be required to reset its interchange schedule in the event that its average interchange fee over the previous four-quarter period exceeds the benchmark.(iv) the new interchange benchmarks will take effect from 1 July 2017. Will the Reserve Bank explain to the Treasurer - (i) why it allow Credit Card Issuers to charge as low as 0.20% and as high as 2% to perform the same Interchange Fees Services; and(ii) how it will observe that Visa/MasterCard Payment Schemes will comply with (i)(A) and (i)(B) above? Grounds for Question 8 Chapter 18 provides extensive information and RBA graphs re Interchange Fees. Graph No 6 therein evidences that - * Credit Card Interchange Fees range from 0.20% to 2%; and * the range of Interchange Fees has broadened materially and progressively over the last 13 years. The Reserve Bank imposed interchange fee Standards that placed a cap on weighted-average Interchange Fees for the MasterCard and Visa credit card schemes (which came into effect in 2003). In 2006 the PSB set the weighted-average benchmark for Interchange Fees at 0.50 per cent for Visa/MasterCard credit cards. Ten years later this weighted-average benchmark remains at 0.50 per cent. RBA's Review of Card Payments Regulation - Conclusions Paper - May 2016 - Section 3.4. 8 Changes to benchmark compliance noted:
---------------------------------------------------- Snapshot of Question 9: Will the Governor of the Reserve Bank provide to the House of Representatives in the Commonwealth Parliament an annual written Statement on the Conduct of Monetary Policy which includes, amongst other things, an annual written Report on the Profitability of Credit Cards and also certifies that Visa and MasterCard separately complied with the two weighted-average benchmarks during the relevant year? Question 9 Will the Federal Treasurer seek the Governor of the Reserve Bank to exercise its "...extensive powers" under the Payment Systems (Regulation) Act 1998 and Reserve Bank Act (1959), Part II, Section 10 ''Functions of Reserve Bank Board" to "gather information from payment system participants and operators" by requesting each of the Four Pillars to provide (to the Reserve Bank) data of their combined Credit Card Products for the financial year ended 30 June 2016 which enables the Reserve Bank to present to the Australian Parliament by 30 June 2017 an annual written Statement on the Conduct of Monetary Policy which, amongst other things, reports on the aggregate Profitability of Credit Card Operations of the Four Pillars that - (i) provides same style 'pie charts' for "Card Issuers' Revenue" [that quantifies at least seven revenue sources] and "Card Issuers' Costs" [that quantifies at least five costs, which include Rewards Programs] that is displayed in in Chapter 8; (ii) informs the annual cost of Rewards Programme and the contribution to this annual cost from Interchange Fees; and (iii) certifies that Visa and MasterCard separately complied with the two weighted-average benchmarks set out in (i)(A) and (i)(B) above during the previous four quarterly reporting periods? Will the Federal Treasurer direct the Governor of the Reserve Bank to request the CEO's of the Four Pillars to ensure that the Four Pillars, in particular their respective Credit Card divisions do not communicate with the other Three Pillars regarding the financial information requested in this question?
Grounds for Question 9 Chapter 8 notes that U.S. Federal Reserve has provided an annual written report to the U.S. Congress on the Profitability of Credit Card Operations of "large U.S. Credit Card banks" for the last 26 years. "Section 8 of the U.S. Fair Credit and Charge Card Disclosure Act of 1988 directs the U.S. Federal Reserve Board to transmit annually to the U.S. Congress a written report about the profitability of credit card operations of depository institutions." In August 2016 the Board of Governors of the Federal Reserve System presented its 26th "Report to the Congress on the Profitability of Credit Card Operations of Depository Institutions" to the U.S. Congress. The Reserve Bank's webpage "Accountability" provides a section titled 'Accountability to Parliament' which notes that the Governor has provided to the Commonwealth Parliament a Statement on the Conduct of Monetary Policy every few years since 1996. ---------------------------------------------------- Snapshot of Question 10: Will the Boards of RBA, APRA and ASIC declare their annual Credit Card fee payments and separately any interest the Board members have paid in the 12 months to 30 June 2016? Question 10 Will the Federal Treasurer request the Chairman of the RBA, APRA and ASIC to - (a) request the members of their respective Board of Directors (such members would all be Financially Literate as determined by the ABS and the Productivity Commission) to declare to the their respective Chairman, the aggregate of Interest and separately Annual Cardholder Fees paid by the Board members for their personal Credit Cards or business credit cards for the year ended 30 June 2016. (b) each provide to the Federal Treasurer the aggregate of interest and separately annual fees paid by their Board members, so that the Federal Treasurer may aggregate the three aggregates of interest and annual fees (paid by each of the three Board of Directors or their employers)? Will the Federal Treasurer provide the aggregate of interest and annual fees of the three Board of Directors to the Australian Parliament before 30 June 2017? This information is sought to appraise any application of the User Pays Principle by Credit Cardholders amongst the afore-mentioned three Boards of Australia's Three Financial Services Regulators. Grounds for Question 10 Over 60% of Australia's national debt on Credit Cards of over $51 billion, namely $32.549 billion incurs Interest charges (RBA statistics report on credit cards - column J) with many such Credit Cards charged at Usurious Unsecured Interest Rates up to 29.49% p.a. RBA Graph 5 dated March 2015 shows that Credit Card Annual Fees vary from zero to an average of $230 for Platinum cards. Australia's Three Financial Services Regulators (RBA, APRA and ASIC) are independent Commonwealth statutory authorities that bear obligations to be objective as decreed by their financial services regulatory roles. ---------------------------------------------------- Snapshot of Question 11: W hy -
* is
"There relatively limited information available on the risk of credit card
lending? Question 11 RBA's Submission to the Senate Inquiry into Matters Relating to Credit Card Interest Rates - August 2015 (Submission 20) under 'Credit risk to banks' (pg 16) noted that "There is relatively limited information available on the risk of credit card lending?" Below is an extract from the 2nd paragraph of 5. IMPACT ANALYSIS of RBA Aug 2002, Reform of credit card schemes in Australia IV: Final reforms and regulation impact statement: Credit card issuing and acquiring are currently very profitable activities in Australia. Information provided to the Joint Study by card scheme members showed that the provision of credit card services generates revenues well above average costs, especially for financial institutions which are both significant Card Issuers and Acquirers. The margins are particularly wide in credit card Acquiring (Table 6). Although card scheme members were generally unable to supply suitable capital data, indicative figuring by the Reserve Bank – based on the main risks against which capital would be held – suggested that the margins in Credit Card Issuing and Acquiring were well above what would be required to provide a competitive rate of return on capital. In view of the Reserve Bank's "...extensive powers ...." under the Payment Systems (Regulation) Act 1998 to gather information from payment system participants and operators, why -(i) is "There is relatively limited information available on the risk of credit card lending?; and (ii) were "... card scheme members generally unable to supply suitable capital data ..." regarding "...the margins in Credit Card Issuing and Acquiring ....? Subsequent to August 2015, has the Reserve Bank requested financial information "... on the risk of credit card lending.." from at least the Four Pillars that control 80% of the Credit Card Products, so that it can now quantify that risk? ---------------------------------------------------- Snapshot of Question 12:
Question 12 M indful of the Reserve Bank's responsibility to the economic prosperity and welfare of all the people of Australia, as decreed under Reserve Bank Act (1959), Part II, Section 10, and its ''extensive powers' under The Payment Systems (Regulation) Act 1998 to gather information from a payment system or from individual participants" what investigations has the Reserve Bank undertaken with -(a) Credit Card Issuers; (b) the three Credit Reporting Agencies; and to seek to identify the - (i) number of Credit Cardholders that are experiencing Extreme Financial And Emotional Distress, (ii) financial quanta (quantums) of that distress; (iii) evidence of that distress and (iv) categories of numbers of Credit Cards held by these distressed Credit Cardholders?
What has the Reserve Bank actioned, and when did it action, to ensure that Credit Card Issuers do not issue additional Credit Cards to applicants that are experiencing Extreme Financial And Emotional Distress due to already having been issued with several Credit Cards?
Has the Reserve Bank established a uniform credit evaluation methodology that all Credit Card Issuers must observe similar to NAB's Microenterprise Loans because too many Australian adults are obtaining Credit Cards with excessive interest rates which would be lower if the defaults were lower if a robust designated credit analysis methodology that all Credit Card Issuers observed was in place? Grounds for Question 12 Chapter 7. includes a table with green background titled "Extracts that evidence that Financial Counsellors are familiar with Unconscionable advertisements and Predatory Lending that tempt many Revolvers with low Financial Literacy Capacity into horrendous Credit Card Debt" that includes several quotations from Financial Counsellors from the "coal face".
Anecdotal evidence from charities/community organisations such as Salvation Army's 'Moneycare' service, St Vincent de Paul's Budget and Financial Counselling Service, Wesley Mission's Credit Line, as well as Aust. Financial Counselling Assoc and Financial Counsellor's Association of Queensland, indicate that - (a) over 50 per cent of Credit Cardholders that are experiencing Extreme Financial And Emotional Distress and seek help from a Financial Counsellor have Credit Card Debt Accruing Interest that exceeds $10,000 (spread over on ave 5 Credit cards); (c) 5% have Credit Card Debt Accruing Interest that exceed $100,000 spread over in excess of 15 Credit Cards; and (d) that this problem of Credit Cardholders that are already experiencing Extreme Financial And Emotional Distress obtaining more Credit Cards which exacerbate their distress, dates back at least 20 years.
At least a dozen times each year a Financial Counsellor that works for one of the 44 charities/community organisations (that employ over 500 Financial Counsellor collectively and receive $43 million from the state and federal Govts to pay the Financial Counsellors' salaries) will assist an individual Credit Cardholder, or a couple, that is/are experiencing Extreme Financial And Emotional Distress, with aggregate Credit Card Debt Accruing Interest that exceed $150,000 spread over in excess of 15 Credit Cards.
Three Credit Reporting Agencies (Veda, Dun and Bradstreet and Experian) provide Credit Reports, Credit Scores and marketing analytics services, ostensibly to Credit Card Issuers. Recently, this triumvirate commenced providing 'on-line' to individual Credit Cardholders their Credit Report and Credit Score at no fee. These three Credit Reporting Agencies do not share their data, so it is necessary for Credit Card Issuers to source Credit Reports and Credit Scores from each of these three Credit Reporting Agencies when undertaking due diligence to determine whether an applicant should be issued the Credit Card it has applied for and the Card Limit. ---------------------------------------------------- Snapshot of Question 13: What is the 'business case' that cost-justifies Citibank (from Feb. 2017) conducting a major advertising campaign for its Citibank Rewards Credit Card which heavily promotes a 0% interest rate on Balance Transfers (up to 80% of the Credit Limit) for 24 month?Why is Citibank's 'Important Information' in breach of Regulation 28LFA of the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Act 2011? Why does one webpage advertisement for Citibank Rewards Platinum Credit Card omit from its 'Important Information' four of its 10 'Important Information' clauses? Question 13 Why is Citibank heavily advertising (on radio, television, online and in newspapers) its Platinum Rewards Credit Card which promotes:
Hidden well below Apply Now is fine print which 'inter alia' informs: Re 1. above, any remaining Balance Transfer amount (after 24 months) informs that the Cash Advance interest rate is 21.74% Re 2. above, for additional card holders an annual fee also applies, currently $90 per card.Re 3. above, Citi Rewards are NOT eligible whilst ever you have any Balance Transfer amount outstanding. Re 4. above, you need to open The Terms and Conditions re Complimentary Insurance at www.citibank.com.au/complimentaryinsurance which is written in tiny Arial 9 font.Is Citibank heavily advertising its Platinum Rewards Credit Card because -
Why does Citibank's ' Key facts about this credit card' breach Regulation 28LFA of the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Act 2011 by not providing contemporaneously when inviting readers to Apply Now a compliant SCHEDULE 6 Key Facts Sheet.
Why does Citibank have a Separate advertisement for Citi Rewards Platinum Card as 4 March 2017 which fails to include four clauses in 'Important Information', in particular the below Clause 10 in tiny Arial 10 font?
Click on: Citibank Platinum Rewards Card, Citibank Classic Card and Citibank Simplicity Card as 25 Feb 2017. About one third down that webpage are 6 'print screens' of the 10 clauses within 'Important Information'. Below that is an extract of the text of those 10 clauses. 'Important Information' appears in 6 separate 'print screens' because Citibank provides its 10 clauses of 'Important Information' in a scrolling box that restricted viewing to 10 rows at a time. Click on: Separate advertisement for Citi Rewards Platinum Card as 4 March 2017Why are 4 clauses omitted from 'Important Information' in Separate advertisement for Citi Rewards Platinum Card as 4 March 2017 that appear in the other Citibank web add Citibank Platinum Rewards Card, Citibank Classic Card and Citibank Simplicity Card as 25 Feb 2017 (listed above)?
Below is text of Webpage e-mail sent 4:12pm Sat 4 March 17 to Citibank 'Contact us':
Grounds for Question 13 Citibank is sanctimoniously/virtuously promoting its 0% p.a. interest rate for 24 months on approved Balance Transfers (for up to 80% of their Credit Limit) on Citi Rewards Platinum Card to 'other bank' Credit Cardholders that presently carry a large Outstanding Indebtedness because - (i) the vast majority of these 'other bank' Credit Cardholders possess low Financial Literacy Capacity; and (ii) Citibank has empirical evidence that many such 'other bank' Credit Cardholders that avail themselves of similar Balance Transfer offers fail to make the Minimum Monthly Payment of 2% of their Closing Balance each and every month and thereby forfeit their 0% p.a. interest rate on their Balance Transfer amount. The fact that Citibank's "Terms and Conditions" document (written in tiny 9 font Arial over ? pages) can cancel the 0% p.a. interest rate on their Balance Transfer is not disclosed on any of its advertised webpages. Citibank displays flagrant disregard for its obligations to prospective new Credit Cardholders, pursuant to Regulation 28LFA of the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Act 2011, to provide a Key Facts Sheet that accords to SCHEDULE 6 as Citibank's specific Credit Cards webpages invite readers to 'Apply Now'.
Citibank fails to disclose to prospective 'other bank' Credit Cardholders in its
specific Credit Cards webpage advertisements that
if the new Credit Cardholder fails to pay the Minimum
Monthly Payment of 2%
(or $30 whichever is the higher)
of the Closing
Balance by the
Payment Due Date then
Citibank charges a
Late Payment Fee of $10 every seven days until the
2% (or $30 whichever is the higher) of the Closing
Balance is paid.
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Grounds/Reasons (one document with 21 Chapters) Grounds/Reasons (21 separate Chapters) Written Questions (one document with Written Questions) Written Questions (Individual Written Questions) |
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