1 September 2008
THE Federal Government needs to come up with a new plan that allows consumers to more easily switch their bank mortgages, the opposition says.
The government should be looking at consumer laws in the United Kingdom and the Netherlands as alternatives to its own account switching plan, opposition housing spokeswoman Susan Ley said today.
She said Treasurer Wayne Swan had failed to compel banks to provide their lists of penalties for transferring customers and had been unable to do anything about excessive exit fees.
"Unless banks provide customers with accurate account records showing debit and credit histories and until exit fees reflect administrative costs only, not some punitive disincentive to move your loan, mortgage holders are not going to be able to change banks and competition in the banking sector is going to decline."
The UK had more specific laws to protect consumers entering contracts with their banks and the Netherlands had a successful system where the same account number could be moved from one bank to another, negating the need to contact numerous direct debtors, Ms Ley said.
"Mr Swan's bank-switching package is going nowhere fast," she said.
Why is it that when it comes to keeping banks honest, policy makers lack backbone?
Some of the fees and penalties imposed on us by banks when we try and exercise our right to change lenders is outrageous. Banks obviously make huge profits, staggering amounts of money.
I don't seek to deny anyone making money however, in the real world if a supplier is not competitively priced or fails to deliver on promised service levels then we, the consumers can simply take our business elsewhere.
Coles and Woolworths are continually competing for my grocery business. The tools they use, among others, are price and product quality. They don't place a fine on me for not shopping with them. Could you imagine the uproar if they did.
Yet with banks, the practice of penalising us for shopping elsewhere is condoned by the regulators. I know this is a simplistic view however, the only difference between banks and the supermarkets is the product that they offer us.
Are banks that unsure of their products ability to perform for their customer that they have to impose financial penalties for changing suppliers?
Our policy makers need to simply remember that financial institutions are just another provider of a service. Only this time the service is money.
Maybe that's why it is so difficult for our politicians
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