New banking reforms announced by the Gillard Government will drive more competition to help consumers support smaller banks, credit unions and building societies, and secure our financial system for the long term said Federal Member for Chifley, Ed Husic.
“Our banking system is one of the strongest in the world, but the global financial crisis really hurt smaller lenders and made it harder for them to compete with the big banks,” said Mr Husic.
“These reforms are about giving consumers more choice by supporting our smaller lenders and making it easier for customers to walk down the road and grab a better deal.
“The key to providing more choice for consumers is lowering the barriers that currently prevent people from switching to the banking services that are best for them.
“That’s why the Gillard Government has acted to ban all mortgage exit fees on new home loans after 1 July 2011 and progress full bank account portability so that people can more easily switch banks to get the best deal.
“We are encouraging competition by requiring banks to give potential customers a simple, one page facts sheet about their mortgage which they can compare side by side for different lenders and see where they can get the best deal. We’ll also launch a community awareness and education campaign to help empower consumers to shop around,” said Mr Husic.
“The Gillard Government’s reforms also include a proposal to give the ACCC greater power to prosecute any bank that signals to its competitors they should raise their mortgage rates together.
“The global financial crisis has made it harder for smaller banks, credit unions and building societies to access the low-cost funding needed to compete against the big banks.
“That’s why the Gillard Government is supporting smaller lenders by continuing its investment in Residential Mortgage Backed Securities, which smaller lenders heavily rely on to make loans, and by retaining the Financial Claims Scheme to protect consumers’ deposits permanently.
“The development of a new ‘Government Protected Deposits’ branding will help consumers easily identify that our credit unions, building societies and regional banks are a safe and competitive alternative to the big banks.”
The Federal Government also proposes to allow Australian banks, credit unions, building societies and other companies to issue new types of bonds to help our economy rely less on funding from overseas by harnessing our national superannuation savings to domestically fund more productive investment in our economy.
“By empowering consumers, supporting smaller banks, credit unions and building societies and securing the stability of our financial system, we’ll ensure that we have greater competition, a continued flow of credit and a better deal for Australian consumers in the decades to come.”
Further detailed information is available at www.treasury.gov.au/banking.