Westpac Chief Adds Voice To Growing Criticism Of Mortgage Exit Fee Ban Proposal
Gail Kelly, chief executive of Australian banking major Westpac has strongly criticized the government proposal to ban mortgage exit fees.
Speaking in an interview with the Australian, Mrs. Kelly said the measure was “poor public policy,” Mrs. Kelly said that the proposal to ban exit fees would make it harder for smaller lenders, and actually result in less competition in the market for home loans.
The government says it intends to ban mortgage exit fees starting as soon as the middle of the year.
“We think competition should be allowed to play its role,” Mrs. Kelly said. “If certain players want to have this fee or not have that fee, that is competition. It is not a big matter for us at Westpac but it will have the result of making it harder for the small players.”
Unsurprisingly Mrs. Kelly also said there was no need for the government to legislate against price signaling within the banking industry which is a key proposal in Wayne Swan’s package of banking reforms
“I don’t think there is any need or requirement for further legislation with regard to price matters, price signalling or collusion. All of the laws that are already in place are pretty strong and there isn’t any evidence of that kind of activity happening.” She said.
Mrs. Kelly argues that as the world has emerged from the global financial crisis, competition within the Australian banking industry has not only returned but increased since funding was now easier to obtain.
“There is a significant intensity of competition. We saw during the GFC, when funding was harder to access and a whole lot more expensive, some of the players (in the home lending area) actually stepped back altogether. We are through all of that and the competition is now very, very strong in retail deposits and the competition in mortgages has definitely picked up. We are dealing in a slow growth environment and there is strong competition for mortgages.” She said.
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