Banks unapologetic about ATM fees

Flaherty says regulating banks 'not our role' Paul Vieira, Financial Post Published: Friday, April 20, 2007

OTTAWA - The chartered banks warned MPs yesterday of higher lending rates on personal loans, fewer ATMs and steeper charges on basic services should Ottawa move to regulate fees on ATM transactions.

Senior executives from the Big Six banks made their case before the House of Commons finance committee, as the all-party group of MPs probes fees charged by banks at automated teller machines. The testimony may have marked an end to the ATM fee debate, as Jim Flaherty, the Minister of Finance, said yesterday he was "pleased" with the direction banks are heading on ATM fees.

Just prior to the bankers' appearance, the NDP had announced its finance critic, Judy Wasylycia-Leis, was set to table a private member's bill that would ban ATM fees. Mr. Flaherty -- as well as the Liberals -- suggested he has no interest in regulating the day-to-day fees banks charge.

"That's not our role, quite frankly," he said. "Am I going to direct the banks about what they should be charging for a particular item? That's not the role of the Minister of Finance."

Bank executives were unapologetic about the fees they charged their clients for withdrawing cash from ATMs that they don't own. For the most part, they got a sympathetic audience from Conservative and Liberal MPs, who make up threequarters of the committee.

"We run our ATM network for the benefit of our clients. We put the machines out there for all of our clients -- and 80% of them pay zero for that access," Jim Westlake, head of the Canadian banking group at Royal Bank of Canada, told reporters. "This is not about us putting machines out in the marketplace to make money on fees. It is about providing a service to our clients."

"Our customers, if they are not satisfied, can move somewhere else. They can vote with their feet," added Christopher Hodgson, Bank of Nova Scotia's executive vice-president of personal banking.

Bank customers use ATMs for more than a billion transactions each year, and the bank executives said roughly 75% to 90% of those transactions don't face levies. Customers are charged for some of those transactions -- typically $1 to $2 -- for withdrawing cash from a machine owned by a bank at which the customer does not have an account.

Asked by Liberal MP John Mc- Kay what would unfold should the government back the NDP proposal and ban ATM fees, the executives chimed in with tales of steeper charges on banking service such as cancelled cheques; fewer investments in expanding and improving the ATM network; and higher interest rates on personal loans and lines of credit.

Moreover, the number of nonbank- owned ATMs, or white machines, would likely shrink if fees were banned because that is the sole source of revenue for the machines' owners.

"I guess we are in the category of, 'Be careful of what you wish for,' " Mr. McKay said, in reference to Ms. Wasylycia-Leis's proposed bill.

Outside of Ms. Wasylycia-Leis, none of the other MPs on the committee indicated support for the NDP proposal.

Nevertheless, the NDP was successful in getting ATM fees in the headlines. Mr. Flaherty agreed to take up the cause, at the behest of the party. And most of the banks have responded. Royal Bank, for instance, launched a new line of account that it says will lower ATM fees, while other banks have pledged to place more of their ATMs near university campuses, which generally are home to white-label machines.

The NDP and Bloc Quebecois, though, pressed the banks to disclose the cost of ATM transactions to justify the fees charged. The bank executives refused, citing corporate confidentiality.

"You say you are transparent, but you won't provide the cost structure. That is very strange," said Thierry St-Cyr, a Bloc MP.

pvieira@nationalpost.com

© National Post 2007


Banks unapologetic about ATM fees Flaherty says regulating banks 'not our role' Paul Vieira, Financial Post Published: Friday, April 20, 2007 OTTAWA - The chartered banks warned MPs yesterday of higher lending rates on personal loans, fewer ATMs and steeper charges on basic services should Ottawa move to regulate fees on ATM transactions. Senior executives from the Big Six banks made their case before the House of Commons finance committee, as the all-party group of MPs probes fees charged by banks at automated teller machines. The testimony may have marked an end to the ATM fee debate, as Jim Flaherty, the Minister of Finance, said yesterday he was "pleased" with the direction banks are heading on ATM fees. Just prior to the bankers' appearance, the NDP had announced its finance critic, Judy Wasylycia-Leis, was set to table a private member's bill that would ban ATM fees. Mr. Flaherty -- as well as the Liberals -- suggested he has no interest in regulating the day-to-day fees banks charge. "That's not our role, quite frankly," he said. "Am I going to direct the banks about what they should be charging for a particular item? That's not the role of the Minister of Finance." Bank executives were unapologetic about the fees they charged their clients for withdrawing cash from ATMs that they don't own. For the most part, they got a sympathetic audience from Conservative and Liberal MPs, who make up threequarters of the committee. "We run our ATM network for the benefit of our clients. We put the machines out there for all of our clients -- and 80% of them pay zero for that access," Jim Westlake, head of the Canadian banking group at Royal Bank of Canada, told reporters. "This is not about us putting machines out in the marketplace to make money on fees. It is about providing a service to our clients." "Our customers, if they are not satisfied, can move somewhere else. They can vote with their feet," added Christopher Hodgson, Bank of Nova Scotia's executive vice-president of personal banking. Bank customers use ATMs for more than a billion transactions each year, and the bank executives said roughly 75% to 90% of those transactions don't face levies. Customers are charged for some of those transactions -- typically $1 to $2 -- for withdrawing cash from a machine owned by a bank at which the customer does not have an account. Asked by Liberal MP John Mc- Kay what would unfold should the government back the NDP proposal and ban ATM fees, the executives chimed in with tales of steeper charges on banking service such as cancelled cheques; fewer investments in expanding and improving the ATM network; and higher interest rates on personal loans and lines of credit. Moreover, the number of nonbank- owned ATMs, or white machines, would likely shrink if fees were banned because that is the sole source of revenue for the machines' owners. "I guess we are in the category of, 'Be careful of what you wish for,' " Mr. McKay said, in reference to Ms. Wasylycia-Leis's proposed bill. Outside of Ms. Wasylycia-Leis, none of the other MPs on the committee indicated support for the NDP proposal. Nevertheless, the NDP was successful in getting ATM fees in the headlines. Mr. Flaherty agreed to take up the cause, at the behest of the party. And most of the banks have responded. Royal Bank, for instance, launched a new line of account that it says will lower ATM fees, while other banks have pledged to place more of their ATMs near university campuses, which generally are home to white-label machines. The NDP and Bloc Quebecois, though, pressed the banks to disclose the cost of ATM transactions to justify the fees charged. The bank executives refused, citing corporate confidentiality. "You say you are transparent, but you won't provide the cost structure. That is very strange," said Thierry St-Cyr, a Bloc MP. pvieira@nationalpost.com © National Post 2007