Australians have been short-changed billions of dollars of interest and missed out on bonuses, but that will soon change under new banking regulations.
Treasurer Jim Chalmers announced a series of changes to banking regulations, designed to help customers get a deal, including more choice and lower prices.
Here are the changes, and how they could help you save.
What are the changes to Australian banking?
As part of the changes, people will be alerted each time their interest rate moves and when promotional offers expire.
Savers should eventually be notified about bonus offers which reward customers with extra interest for saving a certain sum or meeting other conditions.
They will also be sent attractive introductory offers used by banks to attract new customers but are short-lived and, on expiry, savers fall to a lower rate.
Banks will need to make it easier to switch loans by ensuring customers have direct and easy access to forms needed to exit a mortgage.
Financial comparison sites will also be required to have more transparency about their financial relationships with product providers, and how products are ranked.
What prompted the changes?
These changes are designed to make it easier for customers to find — and switch to — the best deals.
It comes in response to two Australian Competition and Consumer Commission (ACCC) inquiries that found bank customers could earn and save more.
The reports also found that barriers were stopping customers from switching to better offers.
Treasurer Jim Chalmers ordered the ACCC probe into deposit products in 2023 as banks were thought to be passing cash rate hikes straight onto borrowers but rates were slower to move for savers and increases were often much smaller.
The consumer watchdog found banks were using pricing strategies that were highly complex or took advantage of the tendency to ‘set and forget’.
The ACCC’s calls to notify customers about deposit product changes have been acted on but the government stopped short of revisiting the commission’s suggestion of banking portability.
Banking portability is a feature that allows customers to keep one loan when buying and selling property.
A prominent barrier to changing banks is switching bank details, forcing consumers to re-organise things like automatic payments.
The consumer watchdog said it was worth investigating options to make this easier.
Treasurer Jim Chalmers has announced a suite of changes designed to help Australians get better banking deals. Source: AAP / Mick Tsikas
Chalmers said the banking product changes would help savers and mortgage customers find the information they need to access the best deals in the banking system.
“This is all about better information, better disclosure, and making it easier for people to find better accounts and mortgages. It is all about making it easier for Australians to find and follow better deals,” he said.
“We know that Australians are under the pump and a big part of that has been higher interest rates and so we want to make it easier for people to find the best deal that they can.”
The banking changes were also informed by a second ACCC inquiry into home loan pricing released in 2020, as well as recommendations from a year-long parliamentary inquiry chaired by Labor MP Daniel Mulino.
Chalmers also announced a review into the challenges faced by small and medium-sized banks led by the Council of Financial Regulators (CFR) in consultation with the ACCC.
The review will focus on the role small and medium-sized banks play in providing competition in the sector and the regulatory and market trends affecting them.
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