The federal coalition’s attempt to reverse an incoming ban on mortgage exit fees will block the path towards competitive banking, a leading consumer watchdog says.
The federal coalition is attempting a last-minute political challenge in the Senate to reverse the government’s ban that takes effect on July 1.
Choice consumer watchdog says the chance of a more competitive banking sector will be quashed if the ban is reversed.
"Removing exit fees will pressure lenders to compete on up-front price and customer service, or else face the risk of customers moving their money to get a better deal," Choice spokesman Matt Levey said in a statement.
"This is about giving power back to the most important people in Australia’s banking sector – consumers."
The government went ahead with the regulation in March, saying it would boost competition in the sector and give consumers more say over their home loans.
But the opposition has been against the move from the start, arguing that it will result in higher overall costs for customers and disadvantage smaller banks.
Mr Levey said it was not the time to retreat on reform.
"We have spoken to smaller lenders who already charge minimal exit fees or else are making arrangements to accommodate these changes," he said.