Mar 14, 2008

Labor makes it easier to switch banks

Local families unhappy with their current bank will be able to vote with their feet more easily, after moves announced by the Rudd Labor Government.

Anthony Albanese said he welcomed the announcement because local families were battling to pay off mortgages.

“Families in the Grayndler area have already copped twelve straight interest rates rises and were left with the highest inflation in 16 years by the Liberals”.

“The Rudd Labor Government is tackling the inflation legacy with our Five Point Plan, but unfortunately inflation took a long time to build and will take a long time to turn around.”

According to the ABS, average monthly housing repayments in Grayndler are $650 higher than the Australian average and there are 15,000 homes in the area under some form of mortgage.

“That’s why it’s important local families aren’t handcuffed to their bank by the numerous barriers to switching banks. These barriers often prove such a hassle families just give up in frustration.”

“The Rudd Labor Government understands the pressures on families and is committed to making the banking system work for Australian families and not against them,” said Anthony Albanese.

The four-pronged package of initiatives to make switching banks easier includes:

  • A listing and switching service requiring banks to give their customers accurate information on all direct debits and credits to take to a new bank for easier transferral, if they switch. Banks will also be required to assist new customers to re-establish their direct debits and credits;
  • One single consumer complaints hotline 1300 300 630 providing a first contact point for all consumer complaints about basic banking products – to be provided and maintained by the Australian Securities and Investments Commission;
  • Comprehensive consumer education resources, including a detailed and informative web site providing advice on how to switch, and the costs and benefits of doing so, through the www.understandingmoney.gov.au site; and
  •  An ASIC-led industry review of entry and exit fees that apply to mortgage accounts, shining a light on fees, putting downward pressure on them, and providing better information to consumers to inform their switching decisions.

“Strong competition in the financial services sector is critical to ensuring local families get the best deal possible from their banks or financial institutions,” said Anthony Albanese.

Implementation will begin immediately, and all aspects of the switching package will be finalised by November 2008. The measures will apply to banks, building societies and credit unions.