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Treasurer Scott Morrison lashed out at the banking the sector on Friday, and said there was “no genuine transparency about product and pricing” for consumers.
“[W]hether done implicitly or not, the industry has created these complexities, often aided by regulation designed to protect the regulator rather than the customer, that do nothing for the customer but leave them in the dark and more dependent upon advice, or that just makes them walk away and say it's all too hard,” said the senior official during a speech before the Australian British Chamber of Commerce in Sydney.
Morrison stressed that the solution doesn’t necessarily lie in introducing more products, as Australians can already choose from nearly 4,000 different residential property loans and some 250 different credit cards. “Why switch when everything else seems the same,” he added.
For the Treasurer, the “encyclopaedia” of similar products and a lack of transparency can leave the door open for firms to exploit customer loyalty. Citing figures from the Productivity Commission, Morrison said more than 15% of existing home loan customers are paying the average variable rate on their home loan. Typically, a new home loan customer can undercut that rate by around 0.4 percentage points.
Morrison believes the solutions lies in empowering consumers – such as the introduction of open banking regulations. The rules provide consumers more control over their data, including the choice on who can have it and who can use it.
“Open Banking will be a game-changer. Granting third-party access to your data securely will also make the process of switching between banks less painful and help overcome the 'hassle factor',” said Morrison.
