Are the banking reforms enough?

The Federal Government has announced several reforms which they hope will help Australian consumers receive affordable and satisfactory banking options. But with the big four banks making $1,000 profit for every man, woman and child in Australia, do these reforms miss the point?

The proposed changes to Australia’s current banking system are an improvement on what we have but there remains doubt as to whether they will curb the banking industry’s lust for huge profits. The suggested changes are:
· For all new home loans taken out after 1 July 2011, there will be no exit fees
· Account number portability so consumers can move banks without the hassle of changing direct debit details
· All new home loans will come with an easy-to-understand fact sheet
· Prosecution of anti-competitive price signaling (i.e. where all banks raise rates to higher than they need to be)
· New reforms to ensure responsible lending through credit cards and fairer treatment of those who use them
· Campaign to highlight the benefits of getting a better banking deal and how much consumers can save by switching bank
· Implement a taskforce to make ATM competition possible and ensure fee transparency

Part of the banking reforms is not only to make the big banks more accountable but to also make it easier for smaller financial institutions to be more competitive. To enable this, the government will:
· Allow mutuals and credit unions to operate under the same terms as banks once they receive fast-tracked accreditation
· Provide security for borrowers with smaller lenders through a Financial Claims Scheme
· Support the residential mortgage-backed securities market which provides funding for smaller lenders who don’t see it as prudent to borrow from overseas

As the stock for each of the big four banks has continued to trade up since the government’s announcement of the reforms, it is clear that these proposals are not perceived as a threat to the ability of the big four banks to make money. For more information on the banking reforms, click this link to the Treasury Department.

Leave a Reply

GIPHY App Key not set. Please check settings

New years eve jokes

Men’s Sheds go virtual