The Rudd Government today released the Australian Securities and Investments Commission’s review of mortgage entry and exit fees.
The review reveals that exit fees vary dramatically, highlighting the importance of ensuring banks and other lenders face as much competitive pressure as possible.
The release of the review is another milestone in the implementation of the account switching initiatives I announced in February to boost competition in the banking sector.
The Government asked ASIC to undertake this review as part of our efforts to foster a more competitive banking system that works for Australian families, not against them.
We want the banking system to offer families a real choice of financial products, including on the important issue of the level of fees and the services provided.
We understand there is widespread concern in the community about various aspects of the mortgage industry – including the conduct of mortgage brokers and the level of fees charged on mortgages.
That’s why last week the Commonwealth and States reached a historic agreement at the Council of Australian Governments to develop a national regulatory framework for mortgage lending, to be overseen by the Commonwealth.
This framework will be informed by the ASIC report released today which will help shine a light on high exit fees, and will underpin future efforts to ensure full disclosure of fees and boost competition in the banking sector.
Since I launched our switching package in February, I have been encouraged to see one major bank has already offered a new mortgage product free of exit fees.
As the review notes, various other lenders also offer products free of exit fees.
“Within each lender type, there is a loan offered with a nil early termination fee” (p9)
By increasing competitive pressure on the banks, the Rudd Government is helping to ensure that those banks and other lenders which offer the best value will be rewarded.
The Rudd Government is committed to making it as easy as possible for families to vote with their feet and switch banks if they are not satisfied with their current provider. Attachment: