September 16, 2011

AUSTRALIA: Banks rip off elderly, lobby group claims

SYDNEY, NSW / The Sydney Morning Herald / News / September 16, 2011

Banks routinely rip off vulnerable older Australians by automatically transferring their savings to lower-interest accounts when their term deposits expire, consumer lobby group Seniors Australia claims.

Seniors Australia Chief Executive Michael O'Neil said many elderly people were left disadvantaged when the term deposit they signed up for ended and was automatically rolled over into lower-paying accounts.

He cited one case of a senior who provided details of her deposit being routinely rolled into lower accounts until she protested and the money was again put in a higher-interest term-deposit.  Photo: mozo.com

Mr O'Neil called on banking regulator Securities and Investments Commission to force financial institutions to obtain formal instructions from customers when a term deposit ended or to provide a default account with a higher interest rate.

He said the practice was particularly unfair to older people who relied on interest for an income.

"Action is now overdue," he said in a statement.

"People under income pressure need to maximise the returns on their investments."

Australian Bankers Association Chief Executive Steven Munchenberg said greater regulation was unnecessary.

"Most banks contact their customers and inform them that their term deposit is coming up, but we can't force them to make a decision," he told AAP.

Mr Munchenberg said many banks were offering term deposits at historically high rates in an effort to secure funding in the current economic environment.

He said family members could assist elderly relatives to ensure they were getting the best rates.

"Families do need to be alert as well to make sure that mum or dad are getting the best sorts of deals," he said.

© 2011 AAP
__________________________________________________________
Credit: Reports and photographs are property of owners of intellectual rights.
Seniors World Chronicle, a not-for-profit, serves to chronicle and widen their reach.