Bank customers wishing to compare the lending rates of major Aussie banks should research the facts by themselves as these will not be volunteered to them, according to consumer advocacy group Choice.
Choice discovered that only one bank out of 18 banks in Sydney provided customers with a fact sheet on comparable home loan rates despite regulatory provisions requiring them to volunteer the guiding documents to borrowers.
Choice representative Matt Levey told The Daily Telegraph that he visited bank braches in the city trying to secure a $300,000 loan and hoping at the same time to gain sufficient guidance from loan processing officials.
Instead, banks overwhelmed him with unnecessary documents that mostly consisted of "handwritten notes, a lot of glossy brochures with photos of bank CEOs."
The informal study aimed to simulate the normal bank customer behaviour, Levey said, which usually would not request the fact sheet the federal government said must be supplied to loan applicants starting January this year.
"We thought the best way to test these requirements was to actually test it in the shoes of a regular consumer," Choice was quoted by ABC as saying.
"If the banks were serious about standing behind their products and serious about competing, then they'd be providing Australian consumers with the information they needed to shop around," Levey added.
As it turned out, Levey's bank tour produced but one compliance coming from ANZ but he noted that the bank only issued the home loan fact sheet after repeated requests.
"Banks aren't giving consumers the information they need, they are giving consumers the run around ... and the arrogance is breathtaking. Consumers shouldn't have to come up with magic words to get clear information that will help them find the best mortgage offer," Levey told The Telegraph.
However, the Australian Bankers Association (ABA) clarified that while banks were amenable to the federal regulation about the home loan fact sheet, lenders were not actually compelled by laws to volunteer the documents that would orient customer on various rates offered by banks.
The document is ready to be released at the expressed request of a loan applicant, according to ABA chief executive Steven Munchenberg.
"It is important for consumers to remember that if they want the Federal Government-mandated key home loan fact sheet, then they need to be clear and ask for it," the ABA chief added.
But the office of Federal Treasurer Wayne Swan also made clear that banks cannot evade their "responsibility to give bank customers all the information they need to get the best deal they can."
"The Government will not tolerate any attempt to avoid any of these important reforms and will tighten the screws on any bank which doesn't do the right thing by its customers," Swan's statement said as reported by The Telegraph.
Choice has been campaigning for bank customers to widen their options when securing a home loan and consider the possibility of switching to lenders that offer more attractive mortgage rates in light banks' recent decision to hike their rates independent from that mandate by the Reserve Bank of Australia (RBA).
The move was met with public outcries following the country's major banks latest financial figures that showed all of them raking in billions in profits.
These banks also announced job cuts, which they argued were part of measures to protect their shrinking margin of profits due to the worsening global financial crisis, for now battering many economies in Europe.
That problem, economists said, could soon infect the rest of the world, impacting even Australia.
SOURCE IBTimes
