New reforms set to standardise transparency practices across all banks
The banking industry has expressed approval of new reforms recently unveiled by the federal government, aimed at enhancing transparency for borrowers and savers and simplifying the switching process.
The Australian Banking Association (ABA), representing major banks, and the Customer Owned Banking Association (COBA), representing smaller institutions, voiced their support for the changes.
The response follows Treasurer Jim Chalmers’ announcement that the government would adopt recommendations from multiple inquiries into the banking sector.
Additionally, the government plans to launch an investigation into the regulation of small and medium-sized banks to assess their funding sources and determine if current regulations support new entrants and competition within the sector.
In a report by The Australian, the ABA stated that the government’s changes would ensure “more consistency for customers.”
ABA chief executive Anna Bligh (pictured above left) remarked that many banks were already making efforts to provide easier access to information, but the new reforms would standardise these practices across all banks.
The proposed reforms would require banks to notify customers about changes in interest and savings rates. Comparison websites would also need to disclose how they rank products and any financial relationships with product providers.
“I think transparency on these sorts of relationships is a good thing for customers,” Bligh told The Australian. “I think it makes customers very aware and makes them, I think, more savvy when they’re looking for the best price whether they’re a depositor or they’re looking for a loan.”
COBA, meanwhile, highlighted the need for the inquiry into small and mid-sized bank regulation, led by the Council of Financial Regulators in collaboration with the Australian Competition and Consumer Commission, to consider the diverse models and complexities of different banks.
COBA chief executive Michael Lawrence (pictured above right) argued that current regulations disadvantage smaller banks by forcing them to allocate excessive resources to compliance rather than customer service.
He also criticised the Australian Prudential Regulation Authority’s (APRA) changes to liquidity and capital standards, warning that these adjustments would undermine competition in a market dominated by a few major players.
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