Consumer groups have welcomed moves by a number of banks over the past couple of months to reduce penalty fees. Banks have reduced charges for late payments, overdrawn accounts and dishonoured cheques, and have cut penalty fees altogether for some groups of customers.Consumer groups want to see the banks go further. The policy manager at the consumer group Choice, Gordon Renouf, said some fees should be abolished altogether, while others were still too expensive.The issue of penalty fees, or what the banks prefer to call exception fees, arose in May when the Reserve Bank published its annual review of bank fees. The RBA reported that penalty fees had risen sharply over recent years - more so than any other type of fee the banks charge their retail or business customers.The average charge for spending over the limit on a credit card increased five-fold from $6 in 2001 to $30 in 2006. Late payment fees on credit card accounts rose 55 per cent from an average $20 to $31 over the same five year period.Foreign currency conversion fees rose from an average of one per cent of the transaction in 2001 to 2.4 per cent last year. The cost of using a credit card to withdraw a cash advance from either another bank's automatic teller machine or an overseas ATM has increased threefold from 0.4 per cent of the transaction value to 1.4 per cent.Choice attacked these increases, arguing that the banks would be hard pressed to demonstrate that the cost increases reflected movements in their own costs incurred in dealing with these matters. Since then the banks have made a variety of responses. In July St George Bank cut its dishonour and honour fees to $8 for customers who hold Concession Card. For other customers those fees are $45 for a dishonor and $38 for an honour fee (when the bank honours a payment even though the account is overdrawn). The bank cut out its inward cheque dishonour fee altogether. This fee was charged against the account of a customer receiving a bad cheque and was the fee most heavily criticised by consumer groups.St George has a system of email and SMS alerts. Customers can elect to receive notification of the balance on a nominated account at the beginning of each day. They can also use the service to monitor their direct debits.Choice's Renouf said more banks should offer this type of service. "We make more and more direct debit payments and banks need to do more to help us keep on top of those payments."The review of fees undertaken by National Australia Bank has been more extensive than most. Earlier this month NAB announced that it would remove the over-limit fee on credit card accounts held by customers with Concession Card Accounts. The bank said it would withdraw the ability to overdraw the card on electronic purchases.In October and November the bank will launch a suite of new transaction accounts. A feature of all the new accounts will be a