Government launches review into small and medium banks
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The news: The federal government is introducing a list of changes aimed at helping Australians get a better deal from banking products and will launch a review into small and medium-sized banks.
The context: The changes include forcing banks to tell customers when their interest rates are being changed on savings and transaction accounts and comparison websites will be required to better disclose how they're ranking products and their relationships with product providers they're recommending.
The government's review into small and medium-sized banks will include looking at the challenges facing them in the banking sector and market trends. This review will be led by the Council of Financial Regulators and the Australian Competition and Consumer Commission (ACCC).
Longer-term improvements signalled by the government include improving how customers are notified about bonus interest rates offers and when their introductory rate periods end, as well as a Treasury investigation into using behavioural economics to encourage a shift to cheaper loans.
The ACCC completed an inquiry into retail deposit products in December 2023 and a separate inquiry into home loan pricing in 2020.
The retail deposits inquiry found bank customers are missing out on earning more interest from their savings and that banks were using “strategic pricing” for retail deposit products, such as introductory and bonus rates plus various fees and charges, making it hard to compare products.
It also follows a year-long inquiry chaired by Labor MP Daniel Mulino, which culminated in the 'Better Competition, Better Prices' report that emphasised the need for a focus on the regulatory settings affecting small and medium banks.
What they said: "These changes will make it easier for customers to find the best deals and switch to them and come in response to two Australian Competition and Consumer Commission inquiries," Treasurer Jim Chalmers said in a statement.
"They will help create a more dynamic, diverse and resilient Australian banking sector, which is good for consumers, good for industry and good for the economy."
The source: Federal government media release
