What do you get for the $2 service fee paid to withdraw cash from another bank’s ATM?
A university finance lecturer who pursued Westpac for $1000 in compensation after the bank’s ATM ate his credit card believes he has the answer: nothing.
Dr Andrew Leung, 64, launched proceedings in the Victorian Civil and Administrative Tribunal after a Westpac ATM in Abbotsford retained his credit card when he tried to withdraw $500 on Melbourne Cup Day in 2015.
“Essentially the machine shut down, it froze, went blank and then switched off,” he told Fairfax Media.
“It started back up after five minutes like nothing had happened. I didn’t get the cash, I didn’t get the card.”
While the $500 transaction was reversed and the $2 fee refunded, the lost card frustrated Dr Leung.
The Bendigo Bank customer had to rearrange his direct debits when insurance companies began sending letters telling him that his payments were overdue and his polices were in danger of being suspended.
Seeking compensation for his lost time, the Richmond man lodged a dispute with the Financial Ombudsman Service, claiming that the card had been “stolen” by Westpac through no fault of his own.
However, the ombudsman told him that it could not consider his complaint because he was not a Westpac customer and had not been provided with a financial service when using the bank’s ATM.
Dr Leung objected to the finding, countering that he had paid a $2 service charge as a non-customer to use the ATM, which he claimed should count as a financial service.
This argument did not change the ombudsman’s view, which was that Dr Leung could only make a complaint against his own bank as it was the operator of his account.
In December 2015, an “incensed” Dr Leung lodged action in VCAT against both the ombudsman and Westpac, seeking $1000 for the time and effort in recovering his stolen card and reinstating the direct debits, as well as the tribunal application.
“I didn’t expect to win, I thought would make a point of it,” the former Monash University finance lecturer and superannuation actuary said.
“I think it’s ridiculous that the banks have this secret agreement between themselves. They charge a service fee which they do nothing for. It’s money for jam for them.”
The tribunal rejected Dr Leung’s claim against the ombudsman in August last year, finding that because their services were free, it was unable to consider it a dispute between consumer and trader under its jurisdiction.
In April, VCAT also ruled in favour of Westpac, stating that it did not have a contract with Dr Leung, as he was not a customer with the bank.
“By prior arrangement between Westpac and Bendigo Bank, Westpac [in effect] agreed to act as agent for Bendigo Bank,” VCAT member Susanne Liden said.
“The arrangement between Westpac and Bendigo Bank is commonplace in current banking practice and such arrangements exist between financial institutions both nationally and internationally.”
Dr Leung said that he did not plan to take his action any further, as it would involve going to a higher court where the costs would outweigh the benefits.
However, he did say he was surprised VCAT ruled that he had no contractual arrangement with Westpac. Instead, he thought it would find that the $1000 compensation figure he wanted was too high.
“It supports the argument that the banks are charging for a service they don’t provide,” he said.
“They don’t actually do anything for it, the transactions are electronic. The cost of each one must be close to zero for the banks.”
Reserve Bank of Australia data shows that customers made nearly 259 million withdrawals at banks other than their own in the past 12 months. At a cost of $2, that equals more than half a billion dollars paid annually in ATM service fees.
Philip Field, lead ombudsman of banking and finance from the Financial Ombudsman Service, said that compensation was rarely awarded for a person’s time spent lodging a dispute.
“The biggest category of complaints about ATMs is typically where someone has used a card for unauthorised transactions,” he said.
“Usually these matters get referred back to the customer’s bank first, it gives them a chance to resolve it.”
Westpac was contacted for comment.