All this Banking Royal Commission stuff is interesting. One might argue that the Big Four banks didn’t get their fair share of the remedial work to follow. It also cost millions to reveal information that wise and motivated regulators, investors or laypersons already knew or could find for themselves with a bit of effort and shoe leather. But I view it as money well spent. It was important to air the industry’s dirty laundry and make more Australians aware of the nefarious corners of our oligopolistic financial system. To let future bank bosses, board members, governments and regulators know what we won’t stand for.
Flicking through the report, some of the suggestions are useful and some of the omissions telling. Lower hanging fruit has been left unpicked.
I’ve long pushed for an idea that would revolutionise the competitive dynamic between our banks. Customers would be able to get a better deal with ease. By amping up competition and arbitraging monopoly profits out of the system, I also suspect it would go at least half way towards solving the incentive and behavioural issues that dominated the Royal Commission headlines. A new law, which could be drafted in a single sentence, could spawn such change. Here’s my first attempt:
By 1 January 2022, the account numbers of all at call transaction and savings accounts, credit cards and variable rate loans of all types offered in Australia must be fully portable between Australian financial institutions, to be executed on request of the customer.
Account number portability would shift consumer behaviour and competitive response as surely as phone number portability did in telecommunications. This wasn’t a topic at the Royal Commission, nor is it one on the national agenda. It should be.
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