Re: Flaherty will get you nowhere
Toronto Star:
Ottawa to take run at rising ABM fees
Mar 05, 2007 04:30 AM
David Olive
ABM fee fight. It's been rather a surprise that Jim Flaherty, the federal finance minister, has expressed irritation with what he feels is a lack of straight answers from the banking industry and credit unions about their high and rising fees for the use of automatic banking machines. A surprise until you recall that Flaherty's boss hails, and to some degree answers to, CEOs in the oilpatch and not Bay Street.
An election-bound Tory government in search of a populist encore to its winsome pledge in the last federal election campaign to slash the GST couldn't hope for much better than to hold the always popular bankers to account on their ABM charges.
The bankers are their own worst enemy, of course. Their dismissive response to Flaherty, whose government needs to outflank the NDP on this issue (which the Dippers first raised), has merely been to point to the $33 billion the banks say they've spent on technology over the past decade, and to assert that Canada has more ABMs per capita than other countries.
We'd be more convinced if the Canadian Bankers Association broke down the tech-spending figure, which takes in everything from global funds transfers to credit checks, and from security to merger analysis for corporate banking clients. In particular, it would be nice to know precisely what portion of that tech investment went to the industry's ABM network, and how close the banks have come to recouping that investment, if they haven't already.
About a decade ago, the banks began to neglect their domestic retail business in favour of usually feckless overseas forays, and began wringing costs out of their domestic-banking cash cow – first by replacing branches with ABMs, and then ripping out their ATMs, which in many cases were replaced by so-called "white brand" machines operated by independent firms.
Did the affected depositors (including Fast Forward, whose closest Royal Bank machine is now roughly a mile out of its way), defect as we should have? No, because unplugging yourself from a bank – which handles your mortgage, retirement planning, discount brokerage business and payroll direct deposits – is only a little less cumbersome than relocating a cemetery.
And as social policy, steep ABM fees are only a step up from so-called payday lenders. Only affluent customers bank online, or remove such large wads of cash from ABMs to minimize the impact of the fee, which can run as high as $6.15 per transaction. When they got done closing branches and removing their brand-name ABMs from low-income neighbourhoods, poor people given to making $20 withdrawals were, and continue to be, at the mercy of no-name ABM operators, experts at turning your $20 bill into $13.85.
Britain, Holland, Ireland and Finland have free ABM withdrawals of clients' money from their own banks. And ABM fees in Canada will likely be reduced or scrapped. The Big Five bankers lost their last big fight with the Finance Department, in 1998 over proposed mergers. This time, if they're smart, they'll avoid a no-win confrontation and score some public relations points by taking the populist route rather than having their practices held up for examination and debate during a heated election campaign.
