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Consumers back big bank levy

CHOICE says health and finances are major concerns, with 74% of consumers supporting a levy to protect them against banks’ bad behaviour

19 April 2016

CHOICE's latest Consumer Pulse Report shows a sharp increase in consumer concern about savings or investments – leaping from 57% in December 2015 to 67% in March 2016 – with overwhelming support for strengthening the financial regulator (87%) paid for by an industry-levy (74%).[1]

The Pulse Report also found health or medical expenses remain a key cost concern with 68% of consumers listing these costs as a pain point.[2]

The Consumer Pulse findings follow the private health insurance price hike and come as debate around the banking sector integrity heats up following Comminsure and other high profile scandals that have left many consumers still fighting for compensation.

"With the increasing concern about savings and investments and overwhelming support (89%) for stronger protections against a powerful banking and finance industry, we're calling on the Federal Government to increase ASIC's powers and restore its funding," says CHOICE CEO Alan Kirkland. 

"While a Royal Commission into the banks would clearly help individual consumers voice their stories and look at systemic market issues, it's vital that ASIC's funding is restored and the regulator is strengthened to ensure financial institutions stop taking advantage of customers.

"We'd like to see ASIC given new product intervention powers to stop harmful products being sold, rather than waiting for a crisis to occur before intervening," Mr Kirkland says.

The Federal Government has already supported the outcome of the Financial System Inquiry (FSI) that would see ASIC:
  • Funded by an industry levy
  • Given new powers to look at product design and distribution
  • Able to intervene sooner to prevent disaster.[3]
"Most consumers support the idea of an industry-levy to cover finance regulation, with 74% agreeing that banks, investment firms, insurers and financial advisers should have to pay to cover the costs of regulating their industries,"[4] says Mr Kirkland.

"We need the banks and financial institutions that cause problems to cover the costs of regulation. But, this levy system must protect the independence of ASIC by making sure that industry funders do not influence how resources are used." 

The Consumer Pulse Report also found electricity remains the number one cost concern at 77%, followed by food and groceries (72%) then health or medical expenses (68%).[5]

"As we head towards the election, the political parties need to take note that electricity has remained the top cost of living concern since the quarterly Consumer Pulse survey was established in May 2014 and consumers are worried about the cost of managing their money and staying healthy," says Mr Kirkland.  

"Consumers of all ages are concerned about the cost of essential medicines (63%) and the cost of visiting their GP (55%). Coupled with the recent private health insurance price hike, health cost pressures are starting to hit home."

CHOICE election asks
CHOICE has called out five things political parties can promise consumers that will help with cost-of-living issues and give people greater confidence in the financial system. These are:
  • Reform the health insurance market to make it easier for people to compare products and to stop subsidising junk policies. 
  • Back an open data policy to give consumers access to the data businesses hold about their behaviour and preferences so they can compare products and get a better deal. 
  • Clean up the credit card market to help consumers compare, save and switch products. 
  • Introduce mandatory fuel efficiency standards to help people find cars that are cheaper to run.
  • Properly fund the finance regulator, the Australian Securities and Investments Commission. At a minimum funding should be restored to pre 2013-14 levels.

[1] CHOICE Consumer Pulse – March 2016, total sample in wave 8 of the Consumer Pulse is n=1062. Fieldwork was conducted between 11 and 24 March 2016 by GMI/Lightspeed Research Australia.
[2] Op. Cit, Consumer Pulse Report - March 2016.
[3] Government response to the financial system inquiry 
[4] Ibid, Consumer Pulse Report - March 2016.
[5] Op. Cit, Consumer Pulse Report - March 2016.

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