Commonwealth Bank cuts fees to win back unhappy customers

The Commonwealth Bank is attempting to win back customers by scrapping fees across a range of mortgage and savings accounts after being stung by criticism of its interest rate rise last November.

The move, which includes the temporary removal of mortgage establishment fees, is part of efforts by the banking sector to smooth over relations with customers after a round of large out-of-cycle interest rate rises.

Westpac took similar steps late last year, scrapping a range of upfront mortgage fees.

It recently decided to extend the offer until May.

It is understood National Australia Bank is planning to overhaul upfront pricing on home loan and deposits.

ANZ is due to unveil a $100 million revamp of its internet banking system.

Westpac has already flagged a $2 billion spending program over the next few years to overhaul its technology to boost mobile phone and online services.

The chief executive of Westpac, Gail Kelly, will be questioned by a senate committee about competition in the banking sector today.

CBA’s unexpected 45 basis point interest rate rise on Melbourne Cup Day resulted in a hit to the bank’s customer satisfaction ratings.

Figures compiled by Roy Morgan Research show that in November CBA’s satisfaction ranking among home loan customers slumped to its lowest in five years, allowing Westpac to catch up and share equal second spot.

The drop in satisfaction means more than a loss of pride for CBA. About half its executives have long-term bonuses worth millions of dollars linked to improved ratings. Roy Morgan is scheduled to release its figures that take in December early next week.

The Commonwealth Bank boss, Ralph Norris, has repeatedly stood by his bank’s rate rise.

He told a senate committee last month that rising funding costs were starting to pressure profits. ”We make decisions based on commercial reality and we have made a decision at those times to, obviously, increase our rates because our funding costs had reached a point where we felt that we needed to,” Mr Norris told the committee.

Elsewhere, smaller lenders have been cutting exit fees. And the NSW-based non-bank lender State Custodians has introduced flat fees across mortgages, saying the move will help it become more competitive.

Story by Eric Johnston,

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