National backs down over reward points cut
The National Australia Bank has backed away from proposed retrospective cuts to its Gold Card reward points scheme, after the Treasurer asked the Australian Competition and Consumer Commission to investigate the legality of the plan under the Trade Practices Act yesterday. The NAB had proposed that each point accrued to date would be worth 1.5 Qantas frequent flyer points, in place of the point-for-point conversion currently in place. The changes were to apply retrospectively from June 15th.
After meetings between the NAB and the ACCC yesterday, the bank removed the retrospective part of the changes to the reward scheme. The ACCC chairman, Allan Fels, said that the matter is not closed, however, and the bank will face further scrutiny on disclosure. Professor Fels said that the NAB had underestimated community sensitivity to loyalty schemes, adding that banks changing reward schemes do so “at their own peril in terms of customer relationships”.
The banking industry expressed surprise that the NAB would go ahead with such plans when banks’ public image is so tarnished, particularly in the wake of the NAB’s recent announcement over the closure of 56 rural branches. The ANZ and Westpac capitalized on the situation by advertising special credit cards for customers who wanted to switch banks.
However, the NAB was unrepentant. GM of cards, George Beatty, said that market research had shown that customers are prepared to swap point value for Qantas travel if offered more comprehensive packages through Harvey World Travel with a variety of airlines. Increased costs charged by Qantas to join its frequent flyer scheme have also forced the changes, Mr Beatty said.