Being taken for a ride? Productivity Commission report accuses the big banks of exploiting loyal customers
If you feel like your bank could be treating you better, you’re probably right.
The Australian Government Productivity Commission draft report released today has accused the big banks of exploiting loyal customers.
One of the major issues discussed in the report was how Aussies are being ripped off on their home loans due to the bank’s clever tactics that target a customer’s lack of knowledge of financial products.
“Customer loyalty is often unrewarded with existing customers kept on high margin products that boost institution profits,” the commission wrote in its draft report.
“For this to persist, channels for provision of information and advice (such as mortgage brokers) must be failing.”
But while the banks may not be keeping their customers’ best interests at heart, Aussies aren’t taking the time to shop around and switch banks either. The report found that banking has been stable with a surprisingly high satisfaction rate from customers, despite fierce competition amongst banks not leading to better deals.
The “hassle” and the desire to have all accounts under the same institution are some of the reason Aussies aren’t making the plunge to switch their bank.
Another factor preventing Aussies from switching banks or refinancing mortgages, was “the need to decide between a large number of options” which the report claimed “makes product comparisons difficult and leads to choice overload.”
According to the report, it’s these “barriers to switching (that) can make loyal customers ripe for exploitation.”
The report also drafted a number of proposals to help resolve the issue for consumers, with one of the suggestions involving access to an online home loan comparison tool, to make comparing products easier and more efficient.
Luckily, Mozo already has a home loan comparison tool that Aussies can use to crunch the numbers on home loan offers, which currently compares over 500 home loans from 80 lenders.
Other resolutions included a crackdown on mortgage brokers who aren’t doing their bit to help find customers the best deals and refunding the total Lenders Mortgage Insurance (LMI) amount once homeowners decide to terminate their loan.
But you don’t have to wait around for a new regulation to refinance your home loan. Check out our home loan comparison tool to make the switch today.
If you’re ready to shave thousands off your home loan by refinancing, make the first step by checking our home loan comparison tool.