Election urges ACCC to investigate bank charges

BANKS would be prohibited from charging exorbitant rates for loans, credit cards and ATMs under a plan to reduce widespread fraud.

Consumer choice surveillance has proposed rules forcing banks to charge "reasonable expenses" for all types of spending, not just the mortgage exit fees, and to explain expenditures "plain language."

Banks charge $ 5 billion a year in fees from households, including $ 1 billion in penalties.

Choice has called for an Australian Competition and Consumer Commission investigation to discover the true costs of tariffs in a presentation to a Senate investigation into the bank.

Best bank campaign director Richard Lloyd said it was absurd that some customers are slugged up to $ 30 for overdrawing and $ 2 to use ATMs belonging to rivals.

Customers pay 640 million U.S. dollars a year in fees "foreign" ATM, the suit said.

"Fees of fraud, hidden fees and unfair contract terms are symptoms of a competitive market," said Lloyd.

Federal Treasurer Wayne Swan is preparing to present a package of banking reforms to make it easier for credit unions and building societies to compete with the dominant of the Commonwealth, ANZ, NAB and Westpac.

The government can take strong action against the banks in signaling changes in interest rates.

It is also believed that taking into account what is easier for dissatisfied customers to ditch banks by allowing them to keep the same account number when transferring to competitors.

Consultations also take place in a classification system of traffic light potential for investment products - red high-risk, medium risk of amber and green for low.

The election filing warns that some suppliers had cut rates on basic savings accounts simply hold of the charges for personal loans and credit cards to make money elsewhere.

Banks have also reaped a wealth of additional loans after gaining huge market share as the global financial crisis.

Mr Lloyd said confusing fine print made "amazing" to consumers, so standardized guidelines in plain language should be compulsory.