Greens MP Adam Bandt has applauded the government's commitment to streamlining the way customers switch banks, but believes that a full account number portability system is still necessary to improve competition, despite enormous projected costs.
"I'm pleased the government has endorsed the central principle behind my account portability Bill. Having direct debits follow account holders when they switch banks is a win for consumers and businesses," Bandt said yesterday.
"The next stop is full account portability," he added.
Bandt's comments were triggered by a new report into bank account portability, compiled by former Reserve Bank governor Bernie Fraser and released this week. The report said that full account number portability was a "giant gold sledgehammer" to crack a "tiny nut" in the Australian banking sector with a cost that would outweigh the benefit.
Fraser said that developing a fully portable account number would require the abolition of the BSB system, the development of a unique account numbering system for all Australians, and the establishment of a central account registry to monitor all transactions and account movements.
As such, Fraser recommended a solution developed by the Australian Payments and Clearing Association (ACPA) where a customer will only have to sign a single form — either in a branch or online — to allow a new institution to import all existing direct debits and future transactions. The system has a proposed cost of roughly $250,000 and an estimated build time of six months, as opposed to the projected costs of full account number portability, estimated at several million dollars.
Treasurer Wayne Swan accepted the plan on Sunday and pledged to work towards a go-live date of 1 July 2012.
The Greens told ZDNet Australia yesterday that while they were happy with the government's initial commitment to easier bank switching, full account number portability is the next logical step. It would take time and cost money, the Greens said, but a fully portable account number would ultimately improve competition in the banking industry.
The banking industry, however, disagrees with the Greens and has for some time now, with both Westpac and the National Australia Bank expressing their distaste for the idea.
Westpac's Bob McKinnon said recently that the cost of developing such a plan would be horrific.
Bandt's Bill to encourage account switching was submitted to parliament on Monday despite Fraser's report issued the day before. The Bill will be debated at a later sitting with a particular emphasis on encouraging competition and promoting easy switching, not just in bank accounts, but also in mortgages and deposit accounts.