UAE | General
Banks 'fleecing customers with hidden charges'
Consumers in the UAE have complained that the cost of hidden charges in banks is rising unchecked in the UAE, leaving them with few or no options in affordable banking.
- By Abbas Al Lawati, Staff Reporter
- Published: 00:05 February 27, 2008
- Image Credit:
- Banks have come under increasing criticism for overcharging by consumers and the media.
Dubai: Consumers in the UAE have complained that the cost of hidden charges in banks is rising unchecked in the UAE, leaving them with few or no options in affordable banking.
Consumers say that the process of choosing institutions to bank with are becoming increasingly difficult as most have hidden charges that are not publicised and are only discovered once an account is opened.
Yousuf K., a government employee, said he was shocked to find that his bank charged Dh500 for a liability letter when applying for a loan with another institution. "Had I known this before I would have chosen another bank," he said.
"A liability letter takes just minutes to process, yet banks like to cash in on it because they know we will pay any price they ask from us considering how vital these letters are in applying for loans".
UAE banks have, however, defended their pricing policies and recent price hikes for certain services and products, saying their pricing policies are "competitive" and "necessary".
Banks have come under increasing criticism for overcharging by consumers and the media.
Some banks have significantly raised service charges as recently as January this year. Recently recorded prices indicate that banks have been charging up to Dh500 for a liability letter that is valid for 12 days, or Dh100 per month for an account statement.
According to information obtained by Gulf News, RAK Bank, the National Bank of Abu Dhabi (NBAD) and Standard Chartered have all doubled the fee for a liability letter. While NBAD doubled the charges from Dh200 to Dh400, Standard Chartered doubled the fees last year from Dh250 to Dh500, with RAK Bank following suit this year. The validity of the liability letters from the three banks is one month, 12 days, and 15 days respectively.
ABN AMRO also charges Dh500 for a liability letter but offers a validity of one month. The bank's spokesperson Nicole Hayde said that fee increases were "as per the costs in the market, and [are] not undertaken unless absolutely mandatory". Liability letters, she added, involved operational time and cost for each certificate.
Operational costs
No RAK Bank official was available to comment on the bank's pricing policy.
The UAE central bank is notified about all price changes, added Hayde.
Andrea Jaishankar, spokesperson for HSBC, agreed that charges were set keeping in mind "the competitive environment and the fair cost of providing that service to a client". In the past six months, HSBC increased the price of an early settlement for a personal loan from 2 per cent of the balance to 3 per cent.
An NBAD spokesperson said that "very few" of the bank's service charges had increased in the past year, without specifying which. "Most of [the price increases] are due to operational cost and market rates that are the main factors of determining the applicable fees for every service," he said.
Filipino national Ameena Zen Al Abid Deen wrote to Gulf News saying her bank was continuously increasing service costs for no apparent reason and without notice.
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