Bank accounts more portable under new bill

Posted by Steve on July 7, 2011

Greens MP and banking spokesperson Adam Bandt has released a new banking bill that will ensure direct debits and credits follow customers when they switch banks, making it easier for consumers to move their accounts.

The Banking and Consumer Credit Protection Amendment (Mobility and Flexibility) Bill 2011 contains a mechanism for account portability. If a customer asks, banks will be required to forward all direct debits and credits to the customer’s new bank for 13 months after they switch.

The bill will also include requirements that banks issue a pro-rata refund of lenders mortgage insurance when consumers switch loans and ensure people can make an informed choice before rolling over term deposits.

“The Greens Bill will mean direct debits and credits automatically follow customers when they switch banks, if the customer so chooses” Mr Bandt said.

“A customer’s old and new banks will have to make sure there is a seamless changeover.”

“This will remove a big barrier to switching accounts and help businesses who can lose out when their customers change banks.”

“This bill is an important step towards full account portability.”

“Mortgage insurance can cost thousands of dollars. If someone wants to switch banks, they lose that money and have to pay it again to their new bank.”

“The Greens Bill will require banks at the start of a mortgage to tell people they are entitled to a pro-rata refund if they leave their mortgage early. If customers do switch mortgages, their old bank will be required to give the customer a pro-rata refund of the unused insurance premium, removing a big barrier to switching mortgages.”