Wayne Swan, treasurer in Australia's government, last week missed the point on competition on home lending.Break fees are an irritant, and invented by banks to make a legislated comparison rate look low.And yes, break fees are nasty, but they are part of the manner in which banks recover their cost of doing business and make profits, and Swan and Treasury can't complain about that.Last week, armed with an unreleased report from Treasury, Swan said he was going to act against exit fees on mortgages. Previously he has implied that the mortgage sector has suffered some kind of competitive market failure, but there is little or no evidence to support that view.Lenders say anyone seeking a better deal is getting service and cheaper terms - and most often from their current lender."It doesn't seem to be all that hard to change mortgages it is fairly easy and fees are part of the competitive market," says Phil Naylor, chief executive of the Mortgage Finance Association of Australia.Around thirty per cent of mortgages are refinances, according to MFAA research. Of that number, around two thirds of borrowers refinance with their existing lender, with just one third moving to a new institution."What happens is that when the existing lender is told you are unhappy and thinking of moving they offer a new arrangement to keep you.""In most cases people are saying that they are better off after refinancing, even taking into account the fees."A more pressing arena for reform is that of ordinary transaction accounts. There are 27 million debit card or everyday bank accounts (so about 1.3 accounts per person) and perhaps four million separate home loan accounts (or fewer than one mortgage for every five people.Customers seem much less inclined to switch their bank accounts than their mortgages, even if they are unhappy with their current provider.One third of bank customers report they are unhappy with their deposit account, according to Roy Morgan research, but just three per cent go through the hassle of switching to another financial institution each year, according to the Australian Payments Clearing Association.That means ninety per cent of unsatisfied customers remain with their existing bank account.In Britain, up to six per cent of customers are said to switch banks annually.One barrier to switching is the bank's record of direct payments owed for an array of household and business bills. And there is no current, simple mechanism for someone to walk into a new branch and have assurance that periodic payments will continue under a new bank account."Consumers typically have from several to many direct transfer arrangements in place, and the average number per consumer is growing under pressure from the businesses they deal with," consumer group Choice said."The switching barriers reduce the effectiveness of competition in the banking sector and thus ultimately harm consumers."The previous federal treasurer, Peter Costello, asked APCA to investigate the issue and report on ways to improve it to assist consumers. APCA recently issued a discussion paper and collected submissions from the financial