Banks ignore consumer pain

David Leermakers | Australian Financial Review | November 14, 2011
http://www.afr.com/p/opinion/banks_ignore_consumer_pain_3kJOYXgPccDCVtZlKsELfL

It seems like almost every day someone from the banking industry is bellyaching about the pace of banking and credit reform, why all this regulation is pointless and why we should feel sorry for them.

So I wasn’t surprised to read that the Australian Bankers Association still refuses to believe that these reforms have been provoked by real problems with the way banks do business.

This is all the more dispiriting given that some of the ABA’s members have already been paying attention and taking steps to address some of the problems in the industry. The removal of unfair fees by some banks is just one example.

Reforms on mortgage exit fees, unsolicited credit limit increase offers and key facts sheets respond to longstanding issues that consumers have been making noise about for years.

The typical response from the banks has been to deny that there is a problem. But even if there is, it can’t be fixed because of the “cost”, much of which is never substantiated.

It seems to us as a consumer watchdog that if banks had responded when concerns were originally raised that the tick and flick credit limit increase offers cause consumer detriment, or that mortgage exit fees and incomprehensible product disclosure stifle competition, these problems could have been addressed without government intervention and at a pace the banks find more agreeable.

Recent regulatory intervention should put the ABA on notice that the industry must respond appropriately to consumer concerns if it wants to avoid having changes forced upon it.

If the banks really want to improve their public profile and avoid regulation, perhaps they should focus less on fluffy ad campaigns and more on addressing genuine consumer concerns with their products.

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