Swan’s banking reforms under fire
This weekend federal treasurer Wayne Swan outlined his banking package to the Senate which included measures to allow banks to tap into the $1.2 trillion superannuation sector to raise funds, an extra $4 billion investment in the residential mortgage backed securities (RMBS) scheme and a national advertising campaign that intends to encourage disgruntled customers to switch banks.
In addition, the package also singled out banks for tough new laws against price signalling and banned exit fees on all new mortgages from 1 July 2011.
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While some industry pundits were largely happy with the package, others have voiced their dissatisfaction.
Vow Financial incoming chief executive officer Tim Brown told First Property Buyer that the proposed package did “little to stimulate competition”.
“This package doesn’t treat the heart of the competition crisis,” Mr Brown said.
“Removing exit fees will only hurt non-bank lenders – it will render them uncompetitive, which defies exactly what the package intends to do.
“Non-banks do not have the ratings to compete with the majors in other areas, including price. What the government needs to be doing is looking overseas to see what intervention programs have helped stimulate competition abroad. The Canadian RMBS scheme has been very successful and it is one we could employ here.”
Mr Brown said the government competition package would only help move the profits “around the big four”.
