The release of the Productivity Commission’s report into the competitiveness of our financial system should serve as a wake-up call to Australia’s politicians, according to financial comparison site RateCity.
RateCity CEO Paul Marshall said the productivity commission should be congratulated for having the conviction to put a ‘no holds barred’ assessment of our banking sector on the table.
“It’s refreshing to see someone put forward an honest diagnosis of our banking sector,” he said.
“Over the years we’ve seen politicians come up with a series of quick fixes in an attempt to boost the competitiveness of the sector.
“The introduction of comparison rates, the ban on home loan exit fees and reforms to the credit card sector levy – none of these policy band-aids have moved the needle in terms of competition.
“The Treasurer needs to come up with more than a banking levy to boost competition.
“For the banking sector to be truly competitive, the system needs to be reformed so that everyday Australians can compare products quickly without needing a finance degree,” he said.
RateCity research over the years has repeatedly shown that loyalty does not pay.
For example, banks regularly offer new customers lower home loan rates while keeping their ‘loyal’ customers on higher rate products.
Banks offering package deals also convince customers they are getting a discount on their home loan when in reality, many customers could save tens of thousands by switching to a lower cost lender.
RateCity research shows a home owner on a discounted variable rate with one of the big four banks could save up to $77,343 by going to a lower cost lender.