01.What the changes mean for you
The first day of July 2012 signals not only the start of the new financial year, but also the start of a series of consumer reforms for which CHOICE has campaigned.
While not everything we’d like to see will become reality, there are a few good starts and improvements for consumers. We’ve outlined the key changes.
Single form switch-ability
From this month it should be easier to switch your transaction account to a new bank and get a better deal. The new switching regimen falls short of full-fledged account portability, but it will allow your new bank to do the legwork in transferring your direct debits and credits from your old bank. Visit our Compare, Ditch and Switch comparison tool to compare lenders.
The reform targets a longstanding impediment to account switching, and the plan is simple on paper. Your new bank will be responsible for obtaining a list of your automatic payments over the past 13 months from your old bank, then you can decide which ones you want to switch. Signing a single form provided by the new bank authorises transfer of your automatic payments and withdrawals.
Just like that, you’ll be able to say goodbye to banks that charge excessive fees or pay paltry interest – or at least, we hope so. You can use our Compare, Ditch & Switch comparison tool to find a better transaction account, and we’ll be watching to make sure this new consumer right doesn’t go wrong.
Better credit cards
Improved disclosure rules for credit cards are part of our Better Banking Campaign, and the reforms kicking off from 1 July are a big win for consumers and another reason to make sure you’ve got the right card.
As of 1 July 2012, your credit card company must:
- Refrain from offering you limit increases on your card, unless you agree to receive them.
- Provide monthly statements that show how long it will take to repay the entire balance if you only make minimum repayments.
- Provide clearer details on the ins and outs of interest-free periods.
All new credit cards must include:
- Standardised key fact sheets to make it much easier to compare offers.
- The capacity for consumers to nominate the credit limit.
- A ban on over-limit fees, unless you have agreed that your lender can charge you such fees.
- Notifications if you exceed your credit limit.
- Repayments to the most costly aspect of your credit card debt first (such as cash advances) to reduce your debt faster.
Energy price hike - how you can reduce their impact on you
Not all changes coming into effect on 1 July are welcomed by Australian households. Electricity prices will increase for those on regulated tariffs in some states, starting on 1 July. In all states except Victoria, government-appointed agencies set the standard retail price for electricity – the regulated tariff. In states with competition, retailers can offer “market contracts”.
Check out our guide to shopping around for a new plan, which provides some useful links to unbiased government energy comparison sites.
If you are feeling the winter chill, take a look at our guide to heating options for your home.
What a carbon price means for you
Starting on 1 July, 300 of Australia’s biggest carbon emitters will pay $23 for every tonne of carbon released. Research done by CSIRO and AECOM has found that the carbon price will see average household living expenses increase by $9.10 per week, and that it will add 0.6% to inflation in 2012-13 (an extra six cents for every $10).
- Use our carbon price calculator for more information on how a price on carbon will affect your cost of living.
- Use the Government’s Household assistance estimator find out if you’ll receive assistance and, if so, how much.
- Be wary of any scam artists. If you’re eligible for household assistance, you do not need to apply for it to receive it.
Future of Financial Advice – soft roll-out
Will the launch of the Future of Financial Advice (FoFA) reforms this month mark a real turning point in the way Australians get their financial advice? We certainly hope so. After more than a decade of CHOICE investigations and campaigns aimed at taking conflict of interest out of the payment model, we see the reforms as long-overdue. Over the next 12 months, financial advisors will have the opportunity to voluntarily embrace the reforms before compliance becomes mandatory in July 2013.
Private health changes
Starting on 1 July, the rebate for hospital and extras insurance is being trimmed down. Singles who earn more than $84,000 and couples and families who bring home more than $168,000 will be affected by the change. At the same time, higher-income earners who don’t have hospital insurance will face a Medicare Levy Surcharge (MLS) hike of up to 1.5% of income. Our April story explains why keeping hospital cover is cheaper than paying the MLS for singles making more than $84,000 and couples earning over $168,000 .