Green wish list: Lower ATM fees, fixed margins on home loans and basic accounts

An easy policy bone that Labor can offer its third party supporters is more prescriptive control of bank pricing, bank practices and even bank products.

Banks won't much like the response but giving the Greens a few policy wins will be one way for a minority Labor government to accommodate their new supporters with one vote in the lower house and nine votes in the Senate.

The Greens have a handful of prescriptive policies on banking.

All banks will have to offer a basic bank account if Greens policy becomes government policy. A basic bank account will offer unlimited Eftpos, a debit card, ATM access, no ongoing service fees, real time warning of penalty fees and elimination of penalty fees where the cost to banks arises from the actions of third parties.

Efforts by banks to coordinate basic bank accounts have failed to win the support of the ACCC on more than one occasion, since the banks' proposed product was too basic for the competition regulator's liking.

The Greens also wants ATM fees capped at actual costs incurred, which would cut the fee paid for using another bank's ATM from $1.50 or $2 to less than $1.

Banks will have to make much more secure credit decisions if Green policy on home loan pricing becomes Labor policy, and legislated by parliament.

The Greens call for a permanent profit margin on home loans, with the cost paid by the borrower reflecting the lender's cost of funds and this fixed margin.

The Green policy document labels this as "fair price mortgages" and also "fixed interest gap mortgages".

Lenders will also have to cap exit fees on home loans at actual and reasonable costs.

Banks will also be able to, and will need to, vary interest rates more often should Green policy on banking become common practice.

The Green policy cuts to the heart of a common complaint of bank management over the setting of interest rates: that the RBA cash rate does not reflect a bank's cost of funds and that even other measures such as the 90-day swap rate are only indicators.

The policy calls for the fixed margin planned for home loans (and described in the prior article) to apply to a cost of funds formula worked out by the bank with APRA.

"Banks' funding arrangements" the policy notes, "are complex and varied".