Bawag bank 'covertly' introduces ATM fees

The Minister for Consumer Protection Alois Stöger (SPÖ) has asked the Association for Consumer Information (VKI) to sue the bank, saying that such a move is “clearly illegal”. He said it’s not about charging ATM fees but forcing existing Bawag customers to switch from their old accounts to newer, more expensive accounts.

Bawag has created new accounts and is terminating existing contracts for around 20,000 of its customers, who will be asked to sign up to the new ‘Kontobox’.

Depending on what features customers opt for the new account costs between €4.90 and €12.90 per month. The cheapest package only allows one free cash withdrawal per month, and the next cheapest package allows five withdrawals a month. After that, cash withdrawals for euros and foreign currency costs 39 cents. Only when you sign up for a ‘Large Box’ account (costing 9.90 per month) or an 'X-Large’, do you get unlimited cash withdrawals.

Previously, many Bawag account holders signed up to its services because of the promise of free banking. BAWAG used to offer so called "880" accounts where accounts operations were free provided that the average balance across a quarter was over €880 (otherwise there was a quarterly account management fee). The terms also included having a monthly salary paid into your account.

Unsurprisingly, many Bawag customers are not happy with the changes and have made complaints. "I’ve been a customer for 40 years, and suddenly I’m being asked to change my account or go to another bank,” Ingo K. told the Presse newspaper. He manages all his bank transactions online and doesn’t need to go into his branch often, so opted for the cheapest account. "My bank adviser did not tell me that there would be fees for ATM machines, which is written somewhere in the small print." He is now considering switching to another bank.

The Ministry for Consumer Protection says that the information Bawag sent to its customers about the new accounts offers “no explanation or information and gives the impression that the consumer will save money by switching to the new account model, whilst in actual fact it will cost them more”. There are concerns that this could set a precedent which would allow banks to covertly force customers to take products that have high transaction fees. This would be an issue for consumers that don't use online banking and make frequent cash withdrawals.

In July, the Euronet ATM provider introduced a fee of €1.95 for cash withdrawals from its machines in Austria, without any warning. Austrian finance minister Hans Jörg Schelling previously said that banks shouldn’t be allowed to charge their own customers for withdrawing cash - and that if banks were to do this they would have to create new accounts. This is what Bawag has done, and it says that all customers who have signed up to the new accounts were made aware of the changes and agreed to them when they signed the contract.