Ditch and switch with less of a hitch
CHOICE Better Banking Campaign win gives consumers power
CHOICE has largely welcomed the Federal Government’s announcement of ‘tick and flick’ reforms that will make it easier for consumers to switch bank accounts from 1 July next year.
The people’s watchdog says the reforms that will remove much of the hassle of switching and are a significant step forward to make all banking more competitive.
Easier account switching was number one on the list of recommendations outlined in CHOICE’s Better Banking Campaign this year and is a major victory for consumers.
“These changes will put in place a simpler, one-step process for allowing consumers to ditch and switch without a hitch,” says Christopher Zinn, CHOICE director of campaigns and communications.
“Simpler account switching gives consumers greater freedom to shop around between financial institutions, increasing the pressure on banks to eliminate fees, compete on price and improve customer service.”
CHOICE says that while exit fees have now been banned for new mortgages the big banks still make it too hard to switch for fear of people leaving them in droves.
“Our Compare, Ditch and Switch site saw 50,000 visitors in its first month, and the CHOICE Big Bank Switch received over 40,000 registrations in two weeks. This just shows the community appetite for switching,” says Mr Zinn.
CHOICE says the recommendations by former RBA chief Bernie Fraser mean that financial institutions must deliver the switching changes in the short-term or face tougher regulations.
While his report found the costs of full account number portability, akin to mobile phone users keeping their number, was too high, CHOICE says a cost-effective solution with such a scheme remains the ultimate goal.
"CHOICE also won agreement from the Government for a formal review in two years time, which will keep the pressure on banks to deliver much needed change or face the real threat of tougher regulations, including an accelerated move towards full account number portability", says Mr Zinn.
CHOICE is continuing to call for a package of consumer banking reforms, including fairer ATM fees and a comprehensive review of Lenders Mortgage Insurance which locks homeowners into loans.
Providing fact sheets for Lenders Mortgage Insurance is a good first step but really only scratches at the surface of another barrier to Australians switching mortgages.
You can read CHOICE’s full action plan for a more competitive and consumer-friendly banking sector.
• Christopher Zinn, CHOICE, director campaigns and communications: 0425 296 442
• Ingrid Just, CHOICE, head of media and spokesperson: 0430 172 669