The federal government plans to act on a number of recommendations from two Australian Competition and Consumer Commission reports that found bank customers could earn and save more if not for barriers stopping them switching to better offers.
Under the changes, savers should eventually be notified about bonus offers which reward them with extra interest for accumulating a certain sum or meeting other conditions.
They will also be sent attractive introductory offers which are used by banks to entice new customers but are short-lived and, on expiry, savers fall to a lower rate.
Treasurer Jim Chalmers ordered the ACCC probe into deposit products in 2023 as banks were thought to be passing cash rate hikes straight onto borrowers but rates were slower to move for savers and increases were often much smaller.
Treasurer Jim Chalmers says the changes are good for the industry and customers. (Mick Tsikas/AAP PHOTOS)
The consumer watchdog found banks were using highly complex pricing strategies or took advantage of the tendency to set and forget.
The ACCC's calls to notify customers about deposit product changes have been acted on but the government stopped short of revisiting the commission's suggestion of banking portability.
A prominent barrier to changing banks is switching bank details, forcing consumers to re-organise automatic payments and the like.
The consumer watchdog said it was worth investigating options to make this easier.
Detailing the banking product changes on Saturday, Dr Chalmers said government had struck the right balance.
"We've taken all the ACCC recommendations and prioritised the ones we thought most important and you are seeing that in this package today," he said in Brisbane.
"This is not necessarily the end of the changes that we want to make to make life a bit easier for people in the banking system but it is an important set of steps that we are taking, an initial set of steps".
Having to re-arrange automatic payments is considered a major barrier to customers changing banks. (HANDOUT/DREAM DESIGN PROPERTY)
Banks will also need to make mortgage-exiting forms easier for customers to find, under the new changes, and Treasury will consider how prompts could be used to encourage customers to switch to better deals.
Comparison websites will also have to disclose if there are ties between their product rankings and financial relationships with firms.
Dr Chalmers said the initiatives would help savers and mortgage customers get a better deal.
"They will help create a more dynamic, diverse and resilient Australian banking sector, which is good for consumers, good for industry and good for the economy," he said.
The Council of Financial Regulators and the ACCC are also set to review challenges faced by small and medium-sized banks, Dr Chalmers said, including the role they play in the competitiveness of the sector.
The banking changes were also informed by a second ACCC inquiry into home loan pricing released in 2020, as well as recommendations from a year-long parliamentary inquiry chaired by Labor MP Daniel Mulino.
Bendigo Bank was among the first to come out in support on Saturday.
"All Australians will benefit from a system that offers more choice," CEO Marnie Baker said.
" ... we welcome any steps that enhance transparency and choice for Australians."
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