Ethics - and the money industries !

The big four Australian banks are the " bad boys " of the money industry.  They continually get a bad press for gouging transaction fees and hiking interest rates in excess of levels set by the Reserve bank.   In contrast, Credit Unions and Building Societies are seen as " the good guys " because they charge lower fees  and are thought to have their customers interest in mind.

Unfortunately the entire money industry seems to have succumbed to a ploy to rob people with term deposits of their legitimate interest rewards.

If you are lucky enough to have a little money invested in a term deposit, about a week before maturity you will get a nice letter from that institution making you aware of the maturity date.   It will probably state that it"  continually offers it's members competitive interest rates and with the pending maturity of your investment this would be a perfect time to confirm your automatic renewal and add any additional funds to your account ".

You have seven days to make change - or your funds are automatically reinvested for the previous term - and this letter then goes on to say  " Your investment will be automatically renewed for a term of 180 days at the standard interest rate applicable on the maturity date.

If that was happening today, you would expect an interest rate of 5.4% on a $ 40,000 deposit, but when you examine the small print of the offer contained in this letter - the interest rate the financial institution is about to lock you into for six months is a full 2% below the going rate - at just 3.25%.

If you present at the counter and suggest withdrawing your funds, you will be immediately offered a better rate - at 5.4%, which is the common rate offering from most financial institutions for a term deposit of that size.

This is certainly a matter of ethics.   The financial industry is deliberately trying to take advantage of those people lacking knowledge of the money market, and those who are elderly, in poor health - or for a variety of reasons would think this letter was a reasonable offer.   So much for keeping the interests of customers to the fore.   The sole benefit of this ploy - is the bottom line of the financial institution concerned.

There once was a day when banks and those whose business was the money market made regular visits to schools, handing out money boxes and exhorting kids to get into a savings regime.   Those days are long gone - and if you save small change and try and have it added to your account, you will most likely find that banking institutions refuse to count it - and those that do charge a high percentage of the total for doing that task.

It seems we live in a world devoid of ethics.   The pursuit of profit takes precedence and customers would be well advised to get a second opinion on all areas of finance - on the basis that trust no longer exists !