TREASURER:
Well, I'm really pleased to announce this morning a bank switching package. This bank switching package is a win for families but it's also a win for competition in the banking sector. Now there are four components to this bank switching package.
The first component to the bank switching package is a listing and switching service. This listing and switching service requires banks to provide their customers with accurate information on all direct debits and credits to take to a new bank. Banks will also be required to assist new customers to re-establish their direct debits and their credits.
It also has one single consumer complaints hotline – 1300 300 630 – providing a first contact point for all consumer complaints about basic banking products. This is to be provided and maintained by the Australian Securities and Investments Commission.
Thirdly, comprehensive consumer education resources, including a detailed website providing advice on how to switch and the costs and the benefits of doing so. Now, this website, I think, is being established today.
And lastly, an ASIC-led review of entry fees and exit fees that apply to mortgage accounts, including shining a light on current fees, and that will, of course, put further competitive pressure on the banks. That will put further pressure on them to provide a more competitive service.
So in summary, this package shows the government has been determined to act decisively to protect Australians and their family budgets. Australian families told us they wanted less hassles if they were to switch their bank, and this package delivers less hassles. Over to you.
JOURNALIST:
So would you say this, hopefully, will show families naming and shaming the banks that might be incurring more costs than others?
TREASURER:
Well, certainly what we need is a competitive banking sector. To have a competitive banking sector and to have genuine competition, people have to be able to move their accounts. Now, at the moment it's a real hassle. People will have all of their accounts bundled. They may have their mortgage, they may have their credit card, and of course mixed up in all of that, are direct debits and also direct credits. Therefore, trying to move an account and, for example, to make sure that your electricity bill is being paid or that the insurance is being paid, can be in endangered.
So what's really important is that if a customer wants to change their account, when they go to their bank the bank acts cooperatively to give them all the information that they require so they can walk down the road and establish a new account.
Of course when it comes to mortgages, there are a variety of rates out there at the moment, as you would all be aware, but if you can't easily move the bank, you can't easily switch your bank, you can't necessarily access a more competitive service. That's the whole point. What we're doing is making the market more competitive.
For example, and this is a very good example of where competition can lead. I hear today one bank announced the abolition of exit fees on their mortgage accounts. That's a first in the banking system.
As you know, the fourth point we have here is that there will be a review by ASIC on entry and exit fees. We already have one bank out there today saying there is an account without exit fees. So that's an example of competition.
All of these measures aim to provide very clear and precise information to customers and place an obligation on the banks to provide the information.
Now, it will take a little time for some banks to get their systems in place. But they have said to me they will get cracking. They will get cracking on this and that's very important. So in the weeks ahead it should be possible for customers to go their bank and receive that basic information. They may not be able to get it for some time in electronic form but they should, in the interim, be able to receive this information freely when they go to the bank and say we've had enough, we're going down the road.
Now, this package is about facilitating competition so that when people have had enough and want to go down the road, they can go to their bank and get all of that information and make a genuine choice.
JOURNALIST:
Is there any element of this that actually forces the banks to comply or are they just obliged to comply?
TREASURER:
No, the banks have agreed to comply. The banks have agreed to comply, but if the banks don't comply, as they've told me they're going to do, then we will have a range of options down the road.
JOURNALIST:
When do you expect ASIC to report on entry and exit fees?
TREASURER:
Well, as quickly as they can. I would hope that we can move our way through the system. It's a review that they're doing with the industry. And of course this is a dynamic market. I certainly hope the initiative from one bank to abolish exit fees puts a lot of pressure on in the short-term while ASIC is doing this review of entry and exit fees.
JOURNALIST:
But this doesn't actually stop banks from charging…
TREASURER:
No it doesn't.
JOURNALIST:
People will still be paying for (inaudible))?
TREASURER:
What this package does is give people access to cheaper options across the board. If you can switch your account then you can save money. Now at the moment some banks, well all banks bar one now, have exit fees and customers evaluate the extent of that fee when they're also taking their decision. We think we need to shine a light on those fees as part of increasing the competitive pressures. And what I want ASIC report to me is how fair these fees are. So they reflect the genuine cost incurred by the bank or are there elements of this fee structure which are above the cost that they face and therefore discourage account-switching, which is what we want to achieve.
JOURNALIST:
Will your program include in it any backtracking option for people who want to switch now and have to incur a fee, whereas later down the track?
TREASURER:
No, we can't go back, we can't go back. People signed contracts.
JOURNALIST:
Can I just ask you about the release of the footage about the Japanese whalers? Is it worth jeopardising diplomatic relations with Japan?
TREASURER:
That's a matter I'll leave for the Foreign Minister, Stephen Smith, and Environment Minister, Peter Garrett.