My Submission to the Australian Banking Royal Commision – Vexations Fee’s

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My name is Phillip Di Biase, I am a businessman, I got my first ABN when I was 15 a year after I started exporting consumer goods globally online.

This has put me in contact with a wide range of banking services.
The following are fee’s I have found throughout my time in business.
I have had many conversations with bank managers, employee’s, IT Consultants, bankers, Visa and Mastercard from many different banks and many different countries usually in search of the best deal but also knowledge.

I have a strong background in Information Technology and I have had a number of insights into banking software and banking systems, I know the databases and backend processes required to facilitate a given bank operations even if it is not oblivious that there is a secondary process behind it.

I use the term vexatious to describe fee’s which have no justification, often the banks MAKE money from these transactions and they are double dipping by charge the consumer (e.g International transaction fee’s and ATM withdrawals).

I have spoken to all the major banks and a large number of small ones about the fee’s listed often when they have just been charged to me, most  workers repeat policy that the fee exists just “because”, when I press the point that they are entirely vexatious I am almost always successful in removing the fee. Rarely do I have to go to the Financial Services Ombudsman (FSO) to settle a complaint except with Paypal who are incredibly stubborn.

Vexatious/exorbitant  fees:Why
Incoming SWIFT FeeLOW FEE Charged by SWIFT (less than $1 aud) the “work” is handled by software
Outgoing SWIFT FeeLOW FEE Charged by SWIFT (less than $1 aud) the “work” is handled by software
Outgoing SWIFT Exchange RateAn ENTIRELY made up number by the bank which gives them a mark up of 5-15% not including fee’s
Incoming overseas money Exchange RateAn ENTIRELY made up number by the bank which gives them a mark up of 5-15% not including fee’s
VISA/Master card foreign currency feesTransactional banks give banks HIGHER commissions for international transactions, the bank is getting more and charging the consumer for the privilege. There MAY be a “fee” charged to banks for an international transaction by visa/master card but I have not seen ANY evidence, if it did exist they still get a larger commission from the transactional bank for overseas funds movement
Bank Offered Exchange RatesENTIRELY MADE UP. Might as well charge as a 5-15% fee
Overseas ATM feesENTIRELY MADE UP! The only fee charged is by the overseas bank, the Australian bank gets a HIGHER commission for handling an overseas transaction by the transactional bank (visa/mastercard)
Dishonour fee’sDealt with by software for free, there MIGHT be a fee of less than $0.30 involved but its typically charged to customers at $5-$15
Overdraft Acceptance FeeDealt with by software, rarely/never approved by a human and is apart of the banks business
Account Keeping Fee’sDealt with by software


Needs to be examinedWhyCounterarguments
Interest rate advertised at the simple rate NOT the compound rateOn most advertisements interest is shown as Per annum e.g “22% pa”.
This is not correct however as it is to be paid back Monthly.
This is compound interest and the simple interest rate should NOT be advertised as it is only the MINIMUM amount that could be charged by the bank per year, if you don’t pay all your monthly payments for a year then the interest rate is

24.359657794448% p.a, 22% is the LOWEST amount you will pay if you pay on time every month. The consumer of the ability to gain interest on their own investments because they have to re-pay more their capital debt sooner or else incur compound interest.


The calculation is P(1+%/100/r)^r(t)


Interest rate returnsThe bank can loan money out in a credit card at 22% and will pay an “investor” 1.25%-2.25% on their “savings account”, this rate is lower than the rate of inflation! Consumers would be much better off buying non-perishable consumer goods then leave their money in a “savings account”.The bank will say they get foreign investment and RBA investment at 1-2%. The problem with that is they charge 25%. They will say there is a risk of default on loans and investments but the investor has no risk in a bank account, but the risk management is handled easily by software and they don’t take loans without low levels of risk done by proven risk management strategy’s
Banks creation of leverage/new moneyIf I buy a TV from JB HI FI with my credit card, it goes from my Bank to JB HI FI’s bank which then lends/loans it out to others. Someone can be bankrupted for not paying their credit card bill which is an outrageous 22% but the accountability on the banks part for investing/re-investing the deposited money is unclear, as well as the regulation on this matter, who does the bank, owe the re-invested money too? The answer is the person who deposited it, but they only have to give it to the person when they withdraw it from the bank which rarely happens. 
Credit card interest and fee’sCredit cards, are charged at a special rate, a very high rate usually around 20% but they can go much higher, but the same person can get a business loan or a personal loan at 9%, there is little/no difference between these loans, nothing is stopping a credit card working just like a personal loan or a personal loan like a credit card so what could possibly justify the almost doubled interest rate? 
Late payment fee’sThat’s what compound interest is. 
Share trading fee’sThese fee’s are HUDREDS of times more than the actual fee which is charged to banks with ISDA’s and other bulk trading agreements at Cents 
No interest if you withdrawBanks will not pay interest on a savings account if you withdraw money from it, but it isn’t as if the bank takes the money bank from the person it borrowed it too and it ALL fits within their expected withdraw limits of which they compensate for by having cash reserves and alternate lending schemes and insurance. 
Commonwealth bank advertising to children and school’s and TAFE’s in classrooms.They are a non-governmental commercial organisation and often the WORST consumer choice. Going round to schools handing out branded equipment and giving incentives to schools to sign kids up to get “savings” bank accounts (which are not even higher than the rate of inflation and benefit the bank mainly because they get to loan that money out at 20+% to others) 
No interest on checking accountsThe bank still invests that money as its own 
Interest Charged on Bank Fee’sThis concept is absolutely abhorrent, not only do they charge you an entirely made up fee, but if the account goes into negative balance you will be charged extremely high interest on it as well. 
“Travel” cardsThese cards often lure customers in by offering them the chance to “lock in their own ex rate” but this confers NO advantage to the consumer as they are already 5-15 cents on the dollar worse than the actual exchange rate and you often can’t re-convert the money from another currency to AUD or if they do your stuck with the banks ex rates which again are TERRIBLE (5-15 cents worse so they sting you TWICE) and there is often a yearly fee on the cards so if you can’t re-covert the money then you just loose it every year. 


Other points:

FEW People knew that the financial service ombudsman exists! They have done a very good job at hiding!

The whole system is quite irritating, basically, the bank lends our own money back too us, charging 22% to us on a credit card and 8-15% on a business loan and 10-20% on a personal loan depending on whatever metrics they use giving us 1-3.5% in return.

If they don’t lend OUR money directly then they lend the reserve banks money which we pay for in taxes, inflation and debt in the budget

If they don’t get it from the reserve bank the get it from overseas investment using the reserve’s rate as a bargaining chip to get the rate as low as possible.

Then we have to pay it back monthly otherwise the interest rate compounds and there is a fee, meaning we can’t invest that money in something that makes a return ourselves.

If a debt is defaulted on, all manner of fee’s are applied to it as well as the compound interest, then they try to liquidate assets on the inflated debt and if that does not cover it they privately sell the debt to collectors a fractions of its value (inflated by fee’s and compounded interest).

To top it all off, the banks are insured and backed up by the government, which we will pay for in cuts to services, “austerity” measures, inflation, taxes etc etc.

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