This week CHOICE launched the first ever group mortgage switch, aiming to give every consumer who takes part the negotiating power of more than a thousand people. We’re calling it the CHOICE Big Bank Switch
. With this campaign, CHOICE is putting itself at the forefront of a next-generation consumer campaign; audacious in what it can achieve now and a template for the future.
If early indications are anything to go by, then this new phenomenon will be here to stay. In the first 24 hours, 10,000 people signed up, and I read last night that pressure is mounting in other countries for the same approach to happen there. But experience tells you that when you rattle a few cages, funnily enough accusations and misinformation begin to fly around. I also think we haven’t been clear enough either. That is why I want to put the record straight about the purpose of this endeavour and what if any payments will be made to CHOICE.
The vision at CHOICE is that Australians become the most savvy and active consumers in the world. We seek to achieve our vision through providing expert information, advice and support to our members but also intervening in markets that don’t work in the consumer interest. Banking is one area which we feel needs to work better for consumers and it is our duty to mobilise consumer action to help make that happen.
For many years CHOICE has been campaigning for banks to offer consumers a better deal. We’ve called it what it is, the CHOICE Better Banking Campaign
. The first step has been to remove the barriers to consumer inertia. In recent months we have won some important changes, including the removal of exit fees on new mortgages, giving consumers greater freedom to move their money and get a better deal. But the long game has always been to create an environment where the banking sector can be driven by empowered consumers. Until now, many consumers have been resigned to just feeling furious with their bank; prevented from taking action because of fees and charges, and tangled up in the ‘apathy tree’ grown and nurtured by a complacent banking sector.
Because of the changes CHOICE has fought for and won, we are now ready to enter arguably the most inspiring and exciting phase of the Better Banking Campaign; direct consumer action leading to a better deal. It’s a campaign of collective action that will directly benefit those that take part, and we hope will have a positive impact across the whole market for all consumers. In a sector that has appeared immovable, our ambitious ideals may now actually begin to yield important and tangible benefits for people across the country.
We are seeking to attract at least 1000 Australians who want a better deal on their mortgages. Next, our partners at One Big Switch will negotiate with mortgage lenders and put the best deals negotiated to people who have registered for the CHOICE Big Bank Switch. Of course, even those who don’t take up the group switch could take the offer to their banks and see whether they will match it. What matters to us is giving everyday Australians the mortgage benefits that are usually reserved for the wealthy.
No doubt some in the financial services sector see they have a lot to lose from consumers being more powerful, which is why I believe a few of them are sniping at the margins with their accusation that CHOICE is conflicted by undertaking this campaign. I take these allegations very seriously because I know they know a thing or two about conflicts!
Their accusation is that we stand to receive a fee – true - and therefore cannot be independent as a result – not true. Let me be clear. The goal of the Big Bank Switch is to give consumers the best chance of getting the best mortgage deal. Any payment made to CHOICE will be clearly disclosed, as well as the need for consumers to make up their own minds. We are not financial advisors.
When the response from the banks is known and products are presented to consumers, we will publish our fixed fee, which will be identical regardless of the products on offer. The fixed fee will deal with any perception that we may prefer consumers to take one product over another. It will also demonstrate that we intend the fixed fee to pay for the costs of running the campaign, not to produce excessive revenue for CHOICE. Any additional money made over and above the cost of the campaign will be ring-fenced for future campaigning for all consumers.
CHOICE is a social enterprise. We accept no advertising, no government handouts, no freebies; we pay our way in the world. This keeps our independence and ability to speak out without fear or favour intact. Rightly so people expect the highest standards from CHOICE and we will live by them.
But we will also not be distracted from tackling the imbalance in the relationship between banks and consumers that has prevented people getting a good deal. I believe that this new wave of consumer action will move us closer to a healthier, perhaps even a more equal relationship with the banks.
Find out more or take part by visiting CHOICE Big Bank Switch