The Treasurer has announced the Government’s response to the ACCC’s Inquiries into retail deposit products and home loan pricing.

A review of the challenges faced by small and medium sized banks will be led by the Council of Financial Regulators (CFR) 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. 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.

In response to the House of Representatives Standing Committee on Economics’ Report Better Competition, Better Prices the Government will also:

• Make banks tell customers when their interest rate changes on their transaction or savings account and improve disclosure requirements for basic deposit products.
• Require financial product comparison websites to better disclose what determines how products are ranked and the financial relationships they have with recommended product providers.
• Make it easier to switch loans by ensuring customers have direct and easy access to the forms needed to exit a mortgage.
• Work 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.
• Ask 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.

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Author: David Jacobson
Principal, Bright Corporate Law
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The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.