Leading online savings bank and account portability advocate RaboDirect has welcomed reforms announced today that will make it easier for Australians to change banks.
The reforms are a result of a report authored by former RBA governor Mr Bernie Fraser, the report recommends a scheme allowing consumers to switch deposit accounts by filling out a single form that would be provided by the customer’s new bank of choice.
The new bank would then contact the customer’s old bank and all creditors and debtors attached to the account.
The process of dealing with the old bank and changing direct debit and direct credit details would be taken out of the consumer’s hands without placing an excessive burden on the banking sector and businesses.
Mr Fraser recommended a working party led by treasury be formed to ensure the proposal is implemented by July 1, 2012.
Greg McAweeney, General Manager of RaboDirect said:
“This represents a step towards fairer banking for all Aussies – something RaboDirect has been an advocate for ever since we started here. The major banks for too long have been able to get away with not putting the customer first, largely because they knew it was too hard for people to up and leave once they had them handcuffed to them. We are in total support of Fraser’s recommendations and see it as a win for all banking customers.”
Describing the proposed switching arrangements as “customer-friendly” Mr Fraser said they and could help to nudge hesitant switchers into action.
“They would avoid heavy costs to industry, and deliver a better alignment of incentives between acquiring and losing institutions,” he said.
Key points
- 49% of Australians say too much administrative work (such as updating direct debits or where salary/income is paid into) prevents them from switching to a different financial institution. (Source: Newspoll survey ‘Bank Switching study’ – national poll of 1,206 Australians conducted in July 2011)
- Greens MP and banking spokesperson Adam Bandt released a new banking bill on 07 July that will ensure direct debits and credits follow customers when they switch banks, making account portability easier
- A limited September 2008 Government package that aimed to help customers switch banks has had limited effect – ASIC has stated: “there was a relatively low level of understanding or knowledge of this facility by consumers”.