The Business Council of Australia (BCA) is rightly skeptical about the Commonwealth Government’s banking reform package.  At best it’s a collection of token reforms that won’t do much harm.  At worst it will lead to unfairness and a lack of transparency in banking charges, with the costs of people switching home loans passed on to other bank customers.  In a media release today the BCA has made the correct call that:

Economy too important for hasty regulatory action

If the Government believes the banks are abusing their market power then they should subject them to proper economic regulation by the ACCC and have the banks justify their charges through a rigorous and independent process, as public utilities have to do with the state competition regulators such as the Queensland Competition Authority.

Unsophisticated approaches such as banning mortgage exit fees strike the observer as politically convenient, knee-jerk reactions to what may be a serious lack of competition in the banking sector – a problem which may not warrant a full-blown inquiry (a good way to delay making decisions) but certainly deserves more serious consideration from the Government than has been given to date.