Consumers win as exit fee ban goes ahead
Choice welcomes Senate vote for banking reform
People’s watchdog CHOICE has welcomed the Federal Parliament’s decision to uphold the ban on mortgage exit fees, which will now come into effect from 1 July, 2011.
The ban was put to a vote in the Senate today, which threatened to see this key consumer banking reform overturned before it even came into place.
“CHOICE welcomes the Senate’s decision to uphold the ban on exit fees and secure this important step towards a more competitive and consumer-friendly banking sector,” says CHOICE Head of Campaigns, Matt Levey.
“In particular we applaud the leadership shown by the Greens and the judgment of Senator Fielding in joining with the Government to put consumers first.
“Removing exit fees will put power back in the hands of the most important people in the Australian banking sector, customers. This reform will help customers switch to a better banking deal and pressure lenders to compete on up-front price and customer service, instead of relying on complex and costly fees.”
CHOICE believes that arguments for maintaining the exit fee ban to benefit smaller lenders were misguided, as they assume that competition can be increased at the expense of people with home loans.
“CHOICE agrees that competition from smaller lenders is crucial, but the way to achieve that is not by trapping home loan customers in uncompetitive deals.
“Abolishing exit fees must be assessed as part of a bigger package that that includes measures to support competition from smaller lenders – and most of all a package that puts customers first,” says Mr Levey.
The people’s watchdog will continue campaigning to secure further banking reforms in the coming months, including simple, one-step switching on transaction accounts and fairer ATM fees.
Read CHOICE’s Banking Report action plan for a more competitive and consumer-friendly banking sector.
• Matt Levey, Head of Campaigns, CHOICE: 0488 214 066
• Ingrid Just, Head of Media, CHOICE: 0430 172 669