01.A fairer financial sector
Along with ASIC’s more far-reaching efforts, new rules were added to the books in 2012 to:
- tackle the fine print on simple investment schemes
- clamp down on misleading advertising, and
- force banks to make it easier for consumers to switch to a competitor.
And as part of ASIC’s ongoing push for greater transparency, the regulator has imposed tougher disclosure rules on complicated investment schemes and is now disclosing more fully its own limitations in the area of consumer protection. The new rules should make a difference – but only if financial services providers choose to follow them.
As of June last year, product
disclosure statements (PDSs) on most
products, simple managed investment
schemes (but not multi-funds, hedge
funds and the like) and margin lending
arrangements are down from up to 100
pages to a maximum of eight A4 pages.
And PDSs must now have uniform
headings, cover specified information
and avoid tiny font sizes.
products automatically included within
super accounts, the PDS must state the
type of cover, the cost of the insurance
and how a person can decline, cancel
or change the cover.
Although the industry was granted
a two-year transition period for existing
products starting from when the changes
were first announced in June 2010,
ASIC says it will allow some leeway for
financial services providers to get on
board, but will take “stronger regulatory
action” if it detects systematic breaches.
Simpler switching between banks
Our 2011 banking satisfaction survey confirmed a
troubling truth: Australia’s big four banks
have long held the lion’s share of accounts,
yet received the lowest satisfaction ratings.
Not much appears to have changed
since the survey. In fact, a recent IMF
report found Australia’s banking sector
to be the most concentrated in the world,
with the big four together controlling
almost 80% of the sector. Why don’t
customers simply take their money elsewhere?
Along with a general feeling that one bank is as bad as the next, many survey-takers told us the inconvenience of transferring direct credit and debit details was a formidable obstacle. However, this hurdle
will no longer exist
should the banks abide by
the new regulations. New
bank account switching rules
that took effect in July last year mean
your new bank (we recommend one that
charges the fewest fees and allows you
to easily switch money in and out of an
interest-bearing savings account) can
demand your current bank provide a list
of regular direct debits and credits over
the previous 13 months. Under the new
rules, you can then sign a single form at
your new bank authorising it to provide
the debiting and crediting institutions
with your new account details.