The Consumer Council of Fiji is calling on the Reserve Bank of Fiji (RBF) to put in place policies to make switching of banks easy, convenient and without cost including transfer of debit and credit information to new bank.
Currently, there are two issues consumers have to deal with if they decide to switch. First is the cost of switching which is often substantial, that deters many customers to switch.
Secondly, there is no automatic transfer of all transactions linked to the customer’s account to the new banking institution – which means that the burden lies on the customer to do all necessary transfer of information from the existing bank to the new one they switch to.
Consumers also face administrative burden of providing new account details to debtors and creditors involved in transfer of funds automatically. For example – salary, mortgage payment, insurance payment, utility and other bills etc
Many consumers may want to switch banks but the burden of facilitating the entire transfer of information from the old account-holder to the new one may be deterring them from doing so.
Making switching of banks easier will not only stimulate competition but it will force the service providers to deliver high quality service at a lower rate to retain their customers.
In many aspects, competition will bring better efficiency and welfare gains for consumers. Competition should therefore be encouraged, facilitated and protected within the financial sector.
RBF and Association of Banks in Fiji (ABIF) should collectively work towards making bank switching easier as the Australian banks are bringing about reforms where bank switching is a simple and consumer friendly process.
Consumers sign one form to transfer all direct debits and credits from their old bank to their new financial institution without any hassle which is facilitated by the banks.
The new switching service will give more power to customers by making it easier to change banks and switch their automatic debit and credit authorizations.
The onus lies on RBF, being the regulator to bring about these reforms so that consumers are able to enjoy the freedom to switch banks to stir true competition in the market.