When calling up to cancel your credit card, it was previously common practice for the bank to offer reduced fees, bonus points or other inducements to keep the card. But credit card retention offers such as annual fee waivers are no longer legal in Australia. When cancelling a credit card, banks are now required to action the request without suggesting an alternative or attempting to retain the customer.
The changes are a result of recent federal government reforms to the National Consumer Credit Protection Act 2009 (Cth). The new laws only apply to credit contracts created after 1 January 2019, but most banks have also made changes already to the way they deal with existing customers.
Under the new laws, credit providers must allow consumers to terminate their credit card contracts at any time, and there must be a way to do this online. When a request is made to cancel a credit card, banks must not make a suggestion that is contrary to the customer’s request, such as making an offer to encourage the customer not to cancel the card. In addition, credit providers must also take reasonable steps to ensure the request is actioned as soon as possible.
The new laws, which apply to all types of credit contracts in Australia, have already started to have an effect. AFF member baldman recently contacted Westpac to discuss the possibility of cancelling their card. This member was told that the bank was now only allowed to offer cardholders the option to switch to a different product.
I rang Westpac yesterday to discuss a waiver / reduction of the annual fee for my altitude black MasterCard. The CSO told me that they were no longer permitted to offer inducements to cardholders to maintain their existing card. They were only permitted to offer cardholders the opportunity to switch to another product.
The CSO said that the card retention team was essentially no more and that these changes had come about as a result of government changes to credit card regulations etc.
Other AFF members have reported similar experiences since the start of this year.
Last year NAB offered to waive my Premium Velocity fee, this year it wasn’t on the table, so I closed it.
I recently asked westpac to cancel my credit card, and he just warned me about 3x that once he presses the cancel button, it cant be reversed. my guess was thats all he is allowed to do.What surprised me that they didnt even ask why I wanted to cancel it.
Exactly the same experience with HSBC Card. Each year they credit my annual fee. When I called was told that they are not allowed to do it this year and said it is due to the new banking regulations. When I asked to close the account was told certainly and it was done with a flick of a switch….was not transferred anywhere else for retention and that was that.
It was common knowledge, previously, that banks would often offer inducements to customers that threatened to cancel their credit cards. In fact, most banks would employ specialised credit card retention teams whose job it was to convince customers not to cancel. Some people found the inducements offered beneficial, as they created a possibility to avoid paying their card’s annual fee. But the Australian government clearly thinks otherwise as they’ve outlawed the practice.
Join the discussion on the Australian Frequent Flyer forum: No more card retention teams?