Anna Bligh doorstop on Government response to mortgage and deposits reforms

Journalist: The question I have is, are these regulations actually necessary, because my understanding is that a lot of banks already disclose this information? 

Anna Bligh: These changes will mean more consistency for customers. Many banks are already doing a number of these things to make it easier for customers to get information. If these become part of regulation, then it will mean every bank will have to do it and it means for customers, it doesn’t matter who you bank with, you’ll be able to get this information 

Journalist: Is the problem then, not necessarily the banks are or aren’t disclosing this information, but more about the placement of that information? There’s some complaints that this is buried in documentation or in the terms and conditions. How are you going to solve that problem? Are you going to make things more prominent for customers to be able to access? 

Anna Bligh: There are a number of banks that already disclose this information in very prominent and easy to access ways. But, these new regulations will mean that regardless of who you bank with customers will be able to get this information from any bank, anywhere, anytime.  

In a very high interest rate environment, we know customers are shopping around like never before. More than 600,000 Australians in the last year have refinanced their mortgage. So, it’s a very competitive market, and customers are already shopping around like never before. 

Journalist: And, just in terms of current regulations, isn’t it already the case that a lot of this information is already required to be in things like product disclosure statements? 

Anna Bligh: It is already the case that banks have to disclose certain information to their customers. I think these new regulations will mean they’ll have to do that in a more prominent and easy to access way. Some banks are already doing that, this will mean customers will get more consistency. If you want to get the best price on your loan, you need to shop around, and to do that you need to be able to compare, and you need to be able to get information in an easy to access way. Australians are already shopping around like never before, and these sorts of changes can maybe make it a little easier for them. 

Journalist: Why aren’t banks doing this already? 

Anna Bligh: There are already a number of banks that prominently display this sort of information to make it easier for customers. It is there on their websites, and it’s easy to find. But that’s not the case for every single bank, and these regulations will mean more consistency, regardless of who you bank with. But the most important thing for customers is to shop around, and Australians are doing that, like they have never done before. More than 600,000 people refinanced their loan in the last 12 months, and more than half of them did that by going to another bank or another financial institution. So, it’s a very competitive market out there, that’s a good thing for customers. Anything that can improve that for customers will make it easier. 

Journalist: Why aren’t all banks doing this already? 

Anna Bligh: Every bank in Australia does things their own way, and some are already doing what the Treasurer is looking to see every bank do. So, I think what these regulations will do is make for more consistency, and reliability of information for customers, regardless of who they bank with. There’s already a lot out there, customers who are looking to get a better rate can already access a lot of comparison sites. One of the things these regulations will do which banks certainly welcome is require those comparison sites to give information in a clearer way. But I encourage customers, if you’re looking for a better rate, shop around. Many banks out there already provide lots of information about the deal that you can get from them, and more than 600,000 Australians have done it in the last 12 months. It’s a lot easier than people think. 

Journalist: There’s $3 trillion sitting in savings accounts nationwide. If banks aren’t letting their customers know that they could be getting a better deal elsewhere or that the interest rates have gone up, they’re making millions of dollars. Do you anticipate they’ll be any pushback from the banks? 

Anna Bligh: These changes being recommended by the Treasurer are the result of three separate inquiries and three separate reports over the last four years. One of the things that those reports found was that Australian banks are passing on interest rate increases to their depositors at a higher rate than most other OECD countries – at a better rate than the UK, and a better rate than the US. So, while it’s pretty tough on the mortgage payment side in this interest rate environment, there are also lots of Australians, particularly retirees, who are getting a very good deal on their deposit, and after a long dry spell, I have to say.  

The deposits review done by the ACCC indicated that Australian banks are passing on more interest rate benefit to their depositors than most other countries in the OECD, and that’s a good thing for Australians. But, the more information that customers can get about good rates out there in the marketplace, then the more competitive our market will be. There are multiple comparison sites out there. I encourage customers, whether you’re looking for a better price on your mortgage, whether you’re looking for a better rate on your deposit, it’s a very competitive market, get out there and shop around. 

Journalist: There are a number of comparison sites, but they also have relationships with providers and with banks. One of the recommendations today is that banks disclose what those relationships are, and the comparison sites do the same. What do you think about that?  

Anna Bligh: I think transparency on these sorts of relationships is a good thing for customers, I think it makes customers very aware and makes them more savvy when they’re looking for the best price, whether they’re a depositor, or they’re looking for a loan. These recommendations come after three separate inquiries, three separate reports, those reports found that Australian customers in many regards are getting a very good deal. But you can always improve things, and that’s what these changes are aiming to do. 

Journalist: These changes that the government has brought in, or has flagged it is going to bring in, don’t quite go as far as what the ACCC were recommending. The ACCC were saying that banks should actually be prompting their customers when better deals are out there or better rates are out there. Are you happy that the government hasn’t gone that far? 

Anna Bligh: One of the proposed changes is that the government will undertake a deep dive and a behavioral economics review of what it is that makes customers switch. And I think that will give everybody a better sense of what works and what doesn’t.  

I think there are a number of recommendations from some of these reviews that are frankly, untested, and I think it’s important to get the balance right between adding to the administrative costs of banking, and ensuring customers get all the information they need when they need it.  

So, we certainly welcome the proposal by the government to do a review from a behavioral economics sense, into what actually drives and motivates customers to switch, because I think that will ultimately lead to better public policy. 

Journalist: The Treasurer has said that the government is still considering, first of all the implementation of these new requirements, and secondly, how it will enforce it and what sort of penalties could be in place. Do you have any idea from the bank’s perspective, what sort of timeframe you’d like the government to work towards, and do you think things like fines are going to be too heavy handed? 

Anna Bligh: Australia’s banks will always work with the government of the day to ensure that any new legislation is good for customers, workable for banks and ends up being effective public policy. So, we look forward to seeing the detail, we will work constructively with the government, and we look forward to a better deal for customers in a very, very competitive market. 

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