Annette Hurley (SA, Australian Labor Party) Share this | Hansard source

The Economics Committee had an inquiry about competition in banking. They had a look at this issue of exit fees. On the advice of many people and many consumer groups, the committee decided that exit fees were not a good idea because there is no point in creating competition within banks if people cannot then decide to shift between accounts. It is critical that people be able to shift.

We have a situation where the big banks have somewhere between 75 per cent and 80 per cent of mortgage accounts. So clearly they have an advantage. But if you want to give an advantage to smaller banks you do it in other ways, and the government has already put those measures in place. You do it in other ways so that those banks get a lower cost of funds. You do not stop competition. You do not stop customers being able to switch between banks.

Time and time again we had examples of customers who were unable to switch because of exit fees. Senator Williams, for example, used that example himself. What you are doing is closing off the ability of customers to switch if they get a better deal if they are not within the banks. Okay, big banks might have 75 per cent to 80 per cent, but that means that one in four customers will not be able to switch—and that is a dumb policy!