NAB early action on fees gets good results

Thursday December 10, 2009

The early action by the National Australia Bank has resulted in a big win for the banking brand with customer complaints significantly declining since the abolishment of penalty fees took effect.

The National Australia Bank was the first of the major four banks to drop the penalty fees from transaction accounts, and their customers have responded in a strong positive way with the bank reporting a massive decline in complaints - 40 per cent since the changes were implemented.

In fact, National Australia Bank announced that while customer complaints were down 40 per cent, there was a sixfold increase in customer acquisitions.

It was July 2009 that saw the National Australia Bank announce that it would be cutting its overdrawn account and dishonour fees, which were responsible for a high number of customer complaints for many banks.

As of October 1 2009, all NAB customers no longer had to pay its standard $30 fee if their accounts are overdrawn, or automatic payments are made with insufficient funds available. This move was predicted to remove over $100 million from the bank's bottom line.

The action was initially made in a bid to win back some of its customers after it was revealed that the subject of overdrawn account fees were the primary source of complaints for the bank with many customers penalized for circumstances that are no fault of their own, as detailed by personal banking executive Lisa Gray advising senior NAB managers of the changes.

"We hear stories every day about a customer's pay going in a day late, gym fees or an insurance premium coming out early - the overdrawn amount is paid or not - but either way an overdrawn account fee is generated," Ms Gray said.

After the welcomed response from both customers and the Federal Government, the other big four banks followed suit with similar actions, along it was only NAB that entirely rid its accounts of fees whereas the others merely reduced fees.

This completely eradication of account fees by NAB has proven a successful considering the significant shift in customer complaints.

Cameron Clyne, Chief Executive of NAB, stated that the rise in customer acquisitions and decline in complaints had almost made up for the amount of funds lost from abolishing the fees.

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