ONE of the most frustrating shopping experiences will soon be a thing of the past, as the Australian Government flags an end to unfair credit card surcharges.
Prime Minister Malcolm Turnbull has declared that the fee charged at the cash register for using a credit card must be no more than the merchant’s cost of processing the transaction — typically a mere 0.5 per cent.
Many retailers charge at least double this amount, and in extreme cases the surcharge can be as much as 20 times higher, in a practice that has infuriated customers.
MasterCard commissioned research last year that showed Australians pay about $1.6 billion a year in surcharges.
Unveiling his government’s formal response the wideranging Murray Financial System Inquiry report, Mr Turnbull said it was time to give consumers “a fair deal”.
“This issue has been the subject of considerable consumer concern,” Mr Turnbull said.
He said if signs appeared in shops indicating that a surcharge applied to credit card transactions, shoppers should be able to assume that “the merchant is recovering the cost of you using the card instead of paying in cash”.
“The fact is — we all know, it is fairly widely known — in some cases these surcharges are well in excess of the real cost,” Mr Turnbull said.
“This is a matter of ensuring that the representation the merchant makes is, by way of regulation, an accurate one.”
Treasurer Scott Morrison said that credit card surcharges would “have to pass the fair dinkum test”.
New legislation banning merchants from imposing unfair card surcharges will be passed by the middle of next year, to be enforced the Australian Competition and Consumer Commission.
The government will task the Payments System Board with advising it on what constitutes an excess surcharge in a report due by March — along with a review of the interchange fees applied between the banks, which are also passed on to customers.
SUPER IN THE SPOTLIGHT
Also on the government hit list is the $1.8 trillion superannuation system.
The government will extend the choice of fund arrangements to more employees by removing the deemed choice for certain enterprise agreements and workplace determinations, and strengthen corporate governance of super funds.
Mr Morrison said that all employees should be able to choose where their super goes.
“If someone can choose their workplace, they can decide where their super goes, and they shouldn’t be stopped by way of rules and awards from deciding,” Mr Morrison said.
FINANCIAL PLANNERS NEED TO IMPROVE
Financial advisers will also be subject to more stringent rules and qualification requirements aimed at lifting standards in the industry, which has been marred a string of cases in which advisers were found to have taken advantage of their clients.
The Australian Securities and Investments Commission will have new powers to intervene when financial advisers are found to be spruiking dodgy products or services.
CONSUMER REACTION
Consumer group Choice welcomed the government’s FSI response and said Qantas, Jetstar, CabCharge “and the other worst offenders” should clean up their act before the new laws take effect.
Chief executive Alan Kirkland said this morning’s announcement delivered on “a big priority for consumers”.
“Choice applauds the government for working towards a financial system that delivers fair outcomes for all Australians,” Mr Kirkland said.
“The government’s response recognises that the balance has been wrong in the system and that consumers need stronger protections backed by more powers for ASIC and the ACCC.”
He said ASIC’s new product intervention powers would allow the regulator to “stop financial disasters before they start and to ban harmful products, rather than cleaning up after unscrupulous players have fleeced customers.”
“We were pleased to see the government commit to crack down on commissions in life insurance advice and promise an ASIC investigation into mortgage broker remuneration,” Mr Kirkland said.
A Choice investigation in May found mortgage brokers doling out poor advice, he said.
MasterCard has welcomed the end to excessive surcharging, but opposes the review of interchange fees which it argues will reduce the capacity of lenders to issue low-rate credit cards.
Key measures of the government’s FSI response are expected to be phased in by July.
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