Fraser leads bank technology study
The state of bank technology in relation to account numbering and the portability of bank accounts is to be the subject of a review led by Bernie Fraser, chair of Industry Super Holdings and ME Bank, the Australian Government announced yesterday.
The review is one of a series of measures announced by the Treasurer, Wayne Swan, in a bank policy package yesterday. Swan's people dressed up the initiative as creating a "competitive and sustainable banking system".
Among a short list of policy initiatives are demand-side measures, such as a ban on home loan exit fees, and portability of mortgage insurance, as well as Fraser's account portability project.
There are several funding measures and a new law on price signalling that the banks say will be bad for the industry.
The most interesting, for its potential long-term benefit, is the Fraser "feasibility study".
Fraser served as Treasury secretary and then Reserve Bank governor for much of the 1980s and 1990s, principally serving Labor governments.
Working once more for a Labor government, Fraser will "conduct a comprehensive feasibility study to examine the technological options, the potential timeline and processes for implementing full account number portability," Swan said, in the statement.
Swan said the Fraser study "will examine the range of issues surrounding account number portability", including "the current technological limits and possibilities around portability".
Swan asked Fraser to report on the options by June 2011.
In a nod to the more ambitious possibilities for the reform package, the Treasurer also cited the "potential need for a central account registry to oversee all banking details and account information, under appropriate supervision.
Fraser said yesterday that he will "bring a fresh and inquiring approach to the issue."
Banks have made it clear in submissions to the Senate banking inquiry that they do not regard account portability as a practical option or even as being warranted.
Fraser said some of the cost estimates he's seen ran into the hundreds of millions.
"All I can say is I've seen some big round numbers. I do not know how valid they are."
However, the consumer lobby accepts that full portability may not be feasible.
Nicole Rich, policy director of the Consumer Law Action Centre, said: "If it is feasible it is, if it isn't feasible it isn't, but at least I would expect to get some better options than what we have now."
"Now we are near the bottom in the world in this and we need to get a better system."