People will be alerted each time their interest rate moves and when promotional offers expire under a suite of changes aimed at prodding bank customers to snag a better deal.
The federal government plans to act on a number of recommendations from two Australian Competition and Consumer Commission (ACCC) reports that found bank customers could earn and save more if not for barriers stopping them switching to better offers.
Under the changes, savers should eventually be notified about bonus offers which reward customers with extra interest for saving a certain sum or meeting other conditions.
They will also be sent attractive introductory offers which are used by banks to attract new customers but are short-lived and, on expiry, savers fall to a lower rate.
Treasurer Jim Chalmers ordered the ACCC probe into deposit products in 2023 as banks were thought to be passing cash rate hikes straight onto borrowers but rates were slower to move for savers and increases were often much smaller.
The consumer watchdog found banks were using pricing strategies that were highly complex or took advantage of the tendency to set and forget.
The ACCC’s calls to notify customers about deposit product changes have been acted on but the government stopped short of revisiting the commission’s suggestion of banking portability.
A prominent barrier to changing banks is switching bank details, forcing consumers to re-organise automatic payments and the like.
The consumer watchdog said it was worth investigating options to make this easier.
Banks will also need to make mortgage-exiting forms easier for customers to find, under the new changes, and Treasury will consider how prompts could be used to encourage customers to switch to better deals.
Comparison websites will also have to disclose if there are ties between their product rankings and financial relationships with firms.
Detailing the banking product changes on June 15, Dr. Chalmers said they would help savers and mortgage customers get a better deal.
“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,” he said.
The Council of Financial Regulators and the ACCC are also set to review challenges faced by small and medium-sized banks, Dr. Chalmers said, including the role they play in the competitiveness of the sector.
The banking changes were also informed by a second ACCC inquiry into home loan pricing released in 2020, as well as recommendations from a year-long parliamentary inquiry chaired by Labor MP Daniel Mulino.
