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Jessica Darnbrough
The Federal Government is determined to ban exit fees despite being told that the decision will stifle competition between lenders, FBAA president Peter White has said.
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Last week, Mr White spoke at the Senate Inquiry into Banking about the impact the government’s proposed blanket ban on exit fees would have on competition.
“I told them, just like a lot of people before me have said, that banning exit fees will hurt Australia’s smaller lenders and negatively impact competition in the mortgage space,” Mr White said.
“But it seems the government is determined to push ahead with its proposed ban.”
Mr White said if the government really wanted to stimulate competition in the mortgage space, they would make Lenders Mortgage Insurance portable.
“If LMI was portable, it would make it easier for consumers to move between lenders. A $700 exit fee really does not stop anyone from switching banks,” he said.
“I have no problem with exit fees, so long as they are fair and reasonable, but I do have a problem with LMI. There is no reason why this should not be portable.”
When asked whether or not the government would try to enforce portable LMI, Mr White said they would be “ignorant if they didn’t”.
Mr White is expected to front the Inquiry again within a few weeks.
