Australia’s banks have made it too difficult for customers to find better deals for deposits and savings accounts — and to switch providers, the competition watchdog has found.
Fees, charges, strategic pricing — including bonus interest rates and introductory rates — have all added to confusion and complicated the picture for customers, who have long been encouraged to switch lenders if they’re unhappy.
The big retail banks were called out earlier in the year by former Reserve Bank governor Philip Lowe for not increasing interest rates on deposit accounts in line with the central bank’s increases to the cash rate.
The Australian Competition and Consumer Commission on Friday said banks should be required to tell customers when they change their interest rates, if they are about to lose entitlements to bonus interest and to consider switching to a better rate.
“We were concerned that several banks could not tell us how many of their customers had missed out on bonus interest, or which specific condition they failed to meet,” ACCC chair Gina Cass-Gottlieb said in releasing the commission’s report into retail deposits.
“While high headline interest rates may seem attractive to customers, they can come attached with conditions that are hard for customers to meet and keep track of.”
The ACCC started its inquiry earlier this year after Treasurer Jim Chalmers directed so. It said savings accounts, term deposits and other similar accounts store more than $1.4 trillion of Australians’ money.
The Federal Government has been recommended to consider reforms to bank accounts to make them more portable and make it easier for consumers to switch between products and banks, which Ms Cass-Gottlieb said would increase competition between the banks.
The inquiry also found many customers often do not receive bonus interest — on average as many as 71 per cent of bonus interest accounts did not attract bonus interest — and they may even be better off with different products.
“Consumers can find the complexity of the pricing of retail deposit products overwhelming,” Ms Cass-Gottlieb said. “While comparison websites can offer information across different banks and products, the results consumers see and the way they are ranked can be influenced by commercial arrangements.”
The Australian Banking Association — the peak lobby group for the big banks — said consumers were clearly winning from higher interest payments made this year, and Australians received more than in many other countries.
“Throughout this year banks have paid more interest on deposits across retail, business and institutional accounts than they have received from mortgages,” chief executive Anna Bligh said.
The association said it would consider each of the ACCC’s recommendations.