St
George Bank will increase fees and reduce services covered by those
increased fees on most transaction account products, a decision that’s
already earning the bank aggravation from customers and mainstream
media.

From July 1 most of the bank’s “Freedom” accounts must
have a minimum balance of $3000, up from $1000. The bank will increase
“foreign ATM” fees to $2 from $1.50, though only in south-eastern
states where the bank is not aggressively chasing market share.

St
George will also double dip on fees for processing transactions on Visa
Debit cards. After 20 years of encouraging customers to press the
“credit” button at the Eftpos terminal when they use their Visa debit
card (on the grounds such a transaction would be fee free) the bank
will now count such a transaction as one of the 10 “free” transactions
each month. St George earns interchange revenue on these transactions
already.

Most surprisingly, St George will count all phone and
internet banking transactions as falling within the “free” transactions
each month (which is currently 10). The bank also increased five other
fees relating to withdrawals overseas and bank cheques.

The management line, reported in the Fin Review,
is that most customers can still avoid the fees. The main option for
doing so appears to be to cease banking with St George, though in
practice the bank may hope to push customers into the $6 a month
all-you-can-eat “Freedom Plus” account.

The bottom line is that
the pricing and design of St George Bank’s suite of basic bank
accounts, which were already a jumble of fees and entitlements
customers are unlikely to bother to remember, are now worse than they
already were. As with Westpac’s increase in some ATM fees earlier this
year, retail bank managers are resorting to fee increases where
customers will complain but not change.

The key message has to
be that the outlook for profit growth at St George Bank can’t be too
flash when management resort to unprincipled price increases.