Easing the cost of living when it comes to banking products and services must mean reducing banking profits in consumer banking.
Consumer banking is by far the most important and the most reliable profit engine for every bank that matters.
Rate of return regulation; the treasurer Jim Chalmers left that and many other harsh policy measures out of his announcement on Friday afternoon on “helping people get better rates on their savings accounts and mortgages.”
Instead, the measures announced drawn the ACCC’s December 2023 report on the retail deposit market and the House Economics Committee’s recent report, Better Competition, Better Prices.
Thus, “the Government will help Australians find and switch to better mortgage deals and get better interest rates on their savings accounts by agreeing to:
Making banks tell customers when their interest rate changes on their transaction or savings account and improve disclosure requirements for basic deposit products.
Making it easier to switch loans by ensuring customers have direct and easy access to the forms needed to exit a mortgage.
Working with banks to help improve how customers are notified about bonus interest rate offers and when an introductory lower interest rate period ends, including through the potential development of industry standards.
Asking Treasury to investigate how behavioural economics and prompts could be used in the banking sector to encourage consumers to switch to cheaper home loans and retail banking products.
Requiring financial product comparison websites to better disclose what determines how products are ranked and the financial relationships they have with recommended product providers.”
The Government on Friday also announced a review into the challenges faced by small and medium sized banks led by the Council of Financial Regulators in consultation with the ACCC.
“The review will focus on the role small and medium sized banks play in providing competition in the sector and the regulatory and market trends affecting them” Chalmers said.
“It will propose ways to improve regulation and ensure that oversight of these banks appropriately balances competition, innovation, and stability.
“The review will also assess how smaller banks source funding, including the role of covered bonds, and consider whether regulatory arrangements for new entrants can support additional competition in the sector.”