Government announces banking reform package

Government banking package ‘opens the door to reform but the major banks must now get in the room’

CHOICE welcomes the Government's banking package as a good starting point but warns that the major banks must get on board to make a real difference for consumers.

The Government’s proposals would make it easier for consumers to switch financial institutions and help smaller lenders to challenge the Big Four – two key moves which CHOICE has long argued would help drive competition in banking.

CHOICE particularly welcomes specific proposals aimed at putting power and money back in the hands of consumers, including:

  • Mandatory fact sheets for people looking for a good home loan deal, a ban on all mortgage exit fees, and transferability of lenders' mortgage insurance
  • Fast tracked credit card reform legislation and a review of ATM fees
  • A range of support for credit unions and building societies

The Government also announced their commitment to working towards full portability of bank accounts. CHOICE believes the feasibility study on this issue should not hold up more immediate steps to take the hassle out of switching – consumers wanting to move to a new bank should only have to sign a single form at their new bank that guarantees the speedy transfer of all their direct debits and credits from their old bank.

“The Government has shown today that they have listened to consumers by putting in place measures that would help them get a better deal,” says CHOICE better banking campaign director, Richard Lloyd.

“Done the right way these proposals could mark the start of a major shift in banking – placing more power in the hands of consumers. And we expect this to be just the first steps of a longer process of wide-ranging reform.

“Some say the banks won’t listen to this. The Government has opened the door to reform. The banks now need to step into the room. We need to see more leadership from the banking industry if these plans are to be turned into effective action that makes a real difference to ordinary Australians. In particular, we want the banks to take the hassle out of switching now,” says Lloyd.

The People’s Watchdog, CHOICE, will play its part in the consultation process to make sure the practical changes are put in place as quickly and as effectively as possible.

The message from CHOICE to all consumers is that you can help yourself ahead of these reforms by becoming more savvy in your personal banking.

In recent days there have been positive signs that more people are prepared to do that – with tens of thousands using the CHOICE ‘Compare, Ditch and Switch’ online comparison website in its first few days.

“We need to see the Government keep its nerve on banking reform until we have a genuinely competitive sector, and for all the regulators pay as much attention to competition in banking as they do financial stability,” says Lloyd.

CHOICE will give evidence to the Senate's Inquiry into banking in Sydney on Tuesday 14th December, during which more detailed views on the Government’s announcement will be provided.

On Wednesday 15th December CHOICE will host Melbourne's first consumer forum on banking; Victorian State Library, corner La Trobe and Swanston Street (entrance 3) at 12:30pm. OPEN TO ALL.

To find out more about the CHOICE Better Banking campaign go to:

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