When Citibank gave customers notice of its intention to introduce a new fee on its ReadyCredit facility, there was a swift reaction by customers. The introduction of the new fee prompted a number of
consumer complaints to ASIC, as well as to other agencies including the
Banking and Financial Services Ombudsman and the Banking Code
Monitoring Committee.

The new fee of $160 applied if account holders did not spend
$1,000 on purchases within 12 months. Many consumers opened a Citibank ReadyCredit account
in response to offers of low interest on balances transferred.

ASIC has announced that Citibank agreed to make some changes to its ReadyCredit card following concerns raised by ASIC. Citibank has agreed to allow
affected customers until 30 June 2006 to avoid the ‘failure to spend’
fee or close their accounts. Citibank has also confirmed that where the fee is incurred, it will attract interest at the rate applicable to the balance transferred, and not the higher rate that applies to purchases.

ASIC was concerned that previous promotional
material for the ReadyCredit card contained information that may have
encouraged consumers to believe that no or only minimal fees would be
incurred, regardless of what was charged to the card.