| 24.06,09. 02:13 AM |
BankWatch plan falters due to lack of interest
June 24, 2009
THE Rudd Government's much vaunted initiative that promised to make it easier for people to switch banks has been largely ignored by consumers since it was introduced nearly eight months ago.
Despite widespread outrage about mortgage rate increases and the introduction of direct charging of ATM fees, a spokeswoman for the NAB told the Herald only two customers a week had used the "listing and switching" service since it was launched in November.
The chief executive of the Australian Bankers Association, David Bell, also told the Herald that uptake of the service had been very low.
The Government said last year it would inject competition into the banking sector by helping customers "vote with their feet".
Under the service, banks agreed to provide customers with a list of all their regular direct debits and credits linked to help them identify which ones they need to transfer. Banks also agreed to assist new customers set up their direct debits.
The paperwork, time and trouble involved in transferring direct debits are the main barriers to people switching banks.
Mr Bell claimed lack of interest in the switching service was due to high levels of customer satisfaction with banks, but consumer advocates said the inertia was due to the new system failing to significantly reduce the trouble involved in switching.
"We never thought the package was going to work and I would be very surprised if it is," the director of policy at the Consumer Action Law Centre, Nicole Rich, said.
"The fact that the banks are able to continue doing whatever they like would suggest people aren't switching."
When the Herald rang one of the big four banks to inquire about using its bank switching facility, the call centre operator replied: "I'm not sure how we organise that. I haven't been asked that before."
After a period on hold, the woman said: "You need to go into the branch and they'll do a printout for you. The easiest thing is to look at your statement."
A spokesman for the Treasurer, Wayne Swan, said yesterday the Government was "committed to ensuring the banking system works for Australian families and not against them". "That's why we've done done more in the past 18 months to foster competition in the system than our predecessors managed in 12 years."
A parliamentary economics committee recommended last November the account switching service be reviewed after 12 months and a decision made on whether a more centralised system would be better.
A professor at the Melbourne Business School, Joshua Gans, has called for all bank account numbers to be made portable, like mobile phone numbers, to enable people to switch easily. "The problem is this is not a piecemeal policy issue. This requires a lot of major changes to do it. It does require some serious investment and legislation to be passed."
The banking industry body responsible for implementing the current switching scheme, the Australian Payments Clearing Association, is collecting exact figures from individual banks on the uptake of the current service by customers, but would not release the numbers to the Herald.