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Consumer Action is pleased to make a submission to the House of Representatives Standing Committee on Economics inquiry into competition in the banking and non-banking sectors.

Our submission considers that:

• There remain significant competition problems in the retail banking and non-banking sector, despite vigorous competition on some matters that has brought about benefits to the majority of consumers, including improved price and service outcomes over a range of products.
• The failures of competition in a number of areas in the retail banking and nonbanking sectors particularly relate to the inability of the demand side to drive competition and for all consumers to receive the benefits of competition equitably. Search and switching costs are a particular problem in these sectors.
• There is increasing complexity for consumers, not only in terms of product offerings, but in how products are delivered through the increasing use of brokers and other intermediaries.
• In the area of consumer credit particularly, vigorous competition has contributed to a range of irresponsible lending practices that have not been in the interests of consumers.
• Some classes of consumers continue to be excluded or penalised in the retail banking and non-banking sector, especially through the use of disproportionate penalty fees.

Our submission recommends that the Committee consider making the following recommendations:

1. That the Australian Government take back from the Australian Payments Clearing Association the principal responsibility for ensuring the delivery of an appropriate listing and switching service for bank customers.
2. That the Australian Government consider introducing a bank account portability scheme, so that consumers own their bank account numbers and can switch them to new institutions.
3. That the new national credit regulatory regime include provisions allowing the regulator to limit the types of costs that may be recovered by an early termination fee and to provide guidance as to an appropriate level for such a fee.
4. That the draft national finance broking bill be enacted as soon as possible or be included in the new national credit regulatory regime.
5. That the new national credit regulatory regime include obligations on all lenders to ensure products meet the needs of customers, and that customers have the capacity to repay credit without hardship
6. That, subject to minor amendments, the provisions of the Australian Securities and Investments Commission (Fair Bank & Credit Card Fees) Amendment Bill 2008 be adopted.
7. That the new national credit regulatory regime include an effective comprehensive interest rate cap that includes fees and charges.
8. That the Australian Government introduce market studies and investigations powers, based on the model in the UK Enterprise Act 2002, into Australian law.

To read our submission, click here: Inquiry into competition in the banking and non-banking sectors.