Question: Some years ago, I had purchased funds from a local financial entity. I agreed with its representative that payment of any interest distributed by the fund is paid by cheque. A week or so ago, I received a letter from my financial entity requiring me to have interest credited in my account at €1.50 for each transaction. This is unfair because, in the past, I was never charged for receiving my dividends. I would like to continue receiving payment by cheque but if I do so, the financial entity will charge me €10 and will aggregate the amount of interest annually (rather than quarterly). I firmly believe that this is rather unfair as I have never authorised the financial entity to arbitrarily change its fees. Can I contest the financial entity’s decision?
Question: For these last few years, I have used my bank’s internet banking service gratuitously. Recently I was informed that the bank will start imposing a tariff for the service. This leaves me with no option but to either accept the charge or alternatively stop using the service and move my accounts with another bank (which may not be a practical solution). Can a bank introduce or change a fee while it is providing such service?
There are two issues which underpin questions of this type. The quantum of the charge and the contractual obligation attached to the entity’s decision.
Any financial entity may introduce or vary its charges as long as it is contractually allowed to do so. Whenever a consumer accepts to avail himself/herself of an entity’s service, there is usually a specific clause which states that the customer agrees to pay those fees and charges which the company may establish from time to time. This is subject to prior notification of such changes to the customer, usually, (but not exclusively) within 30 days of the changes coming into force. In most of the cases considered by the Unit, this clause featured under the terms and conditions of service. Furthermore, the financial entity would have provided the Unit with a specimen copy of the terms which the consumer was likely to have been required to sign before the taking up of the service or product. Alternatively, the financial entity would have provided a copy of the actual terms signed by the customer.
With such general clauses, the entity would cover its legal and contractual responsibility towards its customer should there be any changes to its fee structure. This means that a financial entity may exercise its right to amend its fee structure because the customer had originally agreed to it.
Whether the application or increase of a charge is ethically incorrect is another subject altogether. There might be sufficient and commercially justified reasons for varying a fee structure. In the first question, for example, it is clear that the company preferred to use electronic payments to distribute interest to its investors. Such a practice is quite normal and is promoted because cheques are considered to be an inefficient way of payment. The processing of a cheque is laborious and does not give value to the customer upon presentation. Electronic direct-to-account payments are increasingly becoming a preferred means of payment and provide the consumer with value as soon as the funds are credited. Therefore, it is normal for financial entities to apply a high charge to process payments by cheque – at least to provide an incentive to the customer to switch. After all, even the Treasury and many other government departments are doing away with cheques to resort to electronic direct-to-account payments. Customers may have to learn to ride along with the system and adapt themselves subject to proper and intensive educational initiatives.
With regards to the second question, one may argue that while there might be serious commercial justifications to apply a tariff for the use of such electronic banking facilities, it is evident that consumers – who may have been lured to take up the service because it had been offered for free or at very low cost – received a cold shower when a charge became applicable unexpectedly. Attracting a captive mass of customers on the pretext of a free service and then rolling out a charge on a take-it-or-leave it basis may not be in breach of any contract but may surely be interpreted as being unfair.
