Today we’re in Canberra handing a new CHOICE report on banking to the Treasurer, Wayne Swan, and to members of the Senate Committee that’s carrying out an inquiry into banking.
The report, packed full of consumer views on banking gathered by CHOICE over recent months, won’t bring a smile to the faces of the fattest cats in the banking industry.
It describes the extraordinary situation in Australia where the banks that treat their customers the worst—and are often the most expensive—still have the lion’s share of the market.
Eighty per cent of consumer loans are now provided by the big four banks. They also get a massive helping hand from the government through funding guarantees.
The same banks routinely claim that there is plenty of competition in the sector. If that’s true, why are so many bank customers feeling locked into a bad deal with the biggest players?
And how is it that the banks can avoid telling consumers in plain, understandable language what it is they’re buying and how much it will cost?
CHOICE is calling on the government and regulators to take more action to bring about better banking. A good start would be:
- Boosting competition by making switching easier.
- Cutting unfair fees.
- Making financial products more transparent and easier to compare.
But we also need to see a new culture of banking in Australia. One where the customer and community are put first, rather than super-sized profits and executive pay.
- Banks and regulators should be forced to publish clear, comprehensive data on the complaints made by consumers.
- Boards should be held to account when banks fail their customers.
- Executive pay should be tied to consumer satisfaction.
One key change to which some in the banking industry are bitterly opposed is the introduction of portable bank account numbers. These would encourage consumers to switch with confidence to financial institutions that offer them better service and better prices.
The banks complain this will cost them money to implement. But at the moment, it’s consumers who have to pay for the costs of switching, which can’t be right.
Instead, we think the industry should be required to pay for putting banking market failures right, starting with an easy switching system.
Better banking isn’t an impossible dream. We’ve pointed to many examples of reform in other countries that should happen here, such as the one-step switching system in the Netherlands. Now it’s up to the banks and the government to act.
Meanwhile, consumers should also do the right thing. Challenge your bank for a better deal. If they won’t change, switch to a different bank that acts like it really wants your business.
Would you like to see portable account numbers and lower fees? Do you think it would be fair for banking executive’s pay to be tied to customer satisfaction? What other changes do you think will give Australian consumers a better, fairer and more competitive banking industry?