Invest
Customers need to accept responsibility: ScoMo
Profitable financial services have relied on “persistently opaque pricing” and information barriers to rake in the dough, the Productivity Commission has found, but according to the Treasurer, customers are also at fault.
Customers need to accept responsibility: ScoMo
Profitable financial services have relied on “persistently opaque pricing” and information barriers to rake in the dough, the Productivity Commission has found, but according to the Treasurer, customers are also at fault.
Customers have “become complicit” in allowing financial services to take advantage of them, the federal Treasurer has said, calling on consumers to accept responsibility.
Speaking to mark the release of the Productivity Commission’s final report into competition in the financial services industry, Treasurer Scott Morrison said stronger regulation hasn’t helped customers grow stronger and has in fact infantilised them while also suffocating competition.
“You can't take yourself out of the game and listen to those who want to infantilise you by promising a cotton wool regulatory system, with nanny-like regulators, that rather than awakening and empowering your consumer power, will rock you off to sleep,” he said.
“Beware those promising to protect you. Not only do they usually fail, not only do they cruelly and falsely raise your hopes with vain promises of being shielded or being compensated only to disappoint you.”
Mr Morrison said customers of financial services need to “stop being passengers” but acknowledged that having access to data is a critical step in this.
That’s the problem.
While calling on customers to shake off the “dulling effect” of regulation, he noted that customers actually aren’t in a position to be able to make the right decisions, due to a lack of information.
“They aren't in possession of the detail that accurately shows what kind of deal or discount they are receiving, and are therefore unable to compare precisely with other products in the market or what other customers in their circumstances are getting,” Mr Morrison said.
The report said customers face a “blizzard of barely differentiated products”, rather than real competition, and that many highly profitable financial institutions have gained these profits through “persistently opaque pricing”, “conflicted advice” and a lack of accessible information, leading customers to stay loyal to inappropriate products.
Mr Morrison also noted there is “no genuine transparency around product and pricing”, and that the industry has created these hurdles.
Nevertheless, the Treasurer posed this question: “You also must question whether customers are really seeking it [information] out. Or are they just expecting it to rock up at their door. ‘It’s someone else’s job to ensure that I know all these things’.”
As the financial system lives and dies on customer understanding and action, he said the government is counting on personal responsibility.
“That said, after having enlisted you in your own interest, as the government it’s our job to ensure you can get access to all the things you need to make the right decisions for you,” Mr Morrison said.
The Treasurer said change within the sector has arrived and will continue to develop as Open Banking is rolled out next year.
“The disruptive forces of technology, the arrival of nimble new players, the evolution of data use, and the empowerment of the customer are combining to upend traditional banking products, services and transactions the world over,” he said.
Mr Morrison said the government hasn’t been “waiting or delaying our action” to deliver change within the banking and financial sector and that the government will consider the report’s recommendations in conjunction with the royal commission’s findings.
RELATED ARTICLES
Spending
Moneysmart study reveals Gen Z women more concerned about finances than men
A new research conducted by ASIC’s Moneysmart has unveiled the heightened levels of stress and concern regarding finances and the cost of living among Australian Gen Z women compared to their male ...Read more
Spending
The cost of politeness: Aussies out of pocket by $1,350 due to 'awkward tax'
It's the time of year when Australians dive into their pockets for festive events and gatherings, yet a recent study by PayPal suggests that many are too polite, or perhaps too embarrassed, to ask for ...Read more
Spending
Aussies can ‘NAB Now Pay Later’ with the last major bank to embrace BNPL
NAB has become the latest bank to enter the BNPL market. Read more
Spending
Aussie households spent $368 a week on transport after petrol price surge
Fuel costs have increased by 40 per cent over the past year, a new report from the Australian Automobile Association has revealed. Read more
Spending
Voters say reducing the cost of living should be the government’s top priority
Aussies have ranked high cost of living as the top issue that needs to be addressed by the next government. Read more
Spending
Bodies back Labor’s commitment to stronger BNPL regulation
All parties should commit to stronger regulations for the BNPL sector, according to Financial Counselling Australia. Read more
Spending
Household spending surges led by retail and recreation
Spending on retail, recreation and hospitality have continued to climb as COVID-19 case numbers and restrictions have eased. Read more
Spending
Banks extend financial assistance to flood-affected customers
A range of assistance is available from major banks to those impacted by flooding in NSW and Queensland. Read more
Spending
Moneysmart study reveals Gen Z women more concerned about finances than men
A new research conducted by ASIC’s Moneysmart has unveiled the heightened levels of stress and concern regarding finances and the cost of living among Australian Gen Z women compared to their male ...Read more
Spending
The cost of politeness: Aussies out of pocket by $1,350 due to 'awkward tax'
It's the time of year when Australians dive into their pockets for festive events and gatherings, yet a recent study by PayPal suggests that many are too polite, or perhaps too embarrassed, to ask for ...Read more
Spending
Aussies can ‘NAB Now Pay Later’ with the last major bank to embrace BNPL
NAB has become the latest bank to enter the BNPL market. Read more
Spending
Aussie households spent $368 a week on transport after petrol price surge
Fuel costs have increased by 40 per cent over the past year, a new report from the Australian Automobile Association has revealed. Read more
Spending
Voters say reducing the cost of living should be the government’s top priority
Aussies have ranked high cost of living as the top issue that needs to be addressed by the next government. Read more
Spending
Bodies back Labor’s commitment to stronger BNPL regulation
All parties should commit to stronger regulations for the BNPL sector, according to Financial Counselling Australia. Read more
Spending
Household spending surges led by retail and recreation
Spending on retail, recreation and hospitality have continued to climb as COVID-19 case numbers and restrictions have eased. Read more
Spending
Banks extend financial assistance to flood-affected customers
A range of assistance is available from major banks to those impacted by flooding in NSW and Queensland. Read more
