Amid pressure for the Government to do a deep dive into banks and their profits, there are calls to make it easier for Kiwis to switch banks.
That is on its way with open banking legislation and Newshub can reveal how the Government wants to pay for it: fees and another tax.
Remember back in the day when phones were bricks? And if you changed your mobile provider you couldn’t take your number with you?
Well that changed, and when number portability came in, Tex Edwards used it to set up 2degrees. Now he wants the same thing for bank accounts.
“It would be a lot easier to change banks,” he said.
Changing banks can be an arduous process but there’s a push to make that a whole lot easier.
“Elsewhere in the world you have bank account number portability and that has created more competition and its brought prices down, mortgage rates down and term deposits up,” said Sam Stubbs, the managing director at Simplicity.
Bank account portability is on its way as part of open banking, which is two-ish years away.
The banks are in no hurry though.
“If you wanted to switch banks today you would simply go into the new bank and sign an authorisation form and all of that process would happen behind the scenes within five working days,” said Roger Beaumont of the New Zealand Banking Association.
Stubbs said politicians have “almost avoided” the issue for too long.
“They’ve almost been too scared of the banks. It’s time to get some spine.”
But Commerce and Consumer Affairs Minister Dr Duncan Webb said he doesn’t think “we can do it any faster”.
Open banking – which would allow Kiwis to switch banks super easily – is just one example of something called a “consumer data right”.
It allows companies to share your data so you can switch all your providers simply. It will eventually apply to lots of sectors like energy and insurance.
But it needs a lot of framework, like a souped-up Commerce Commission and Privacy Commissioner to keep watch over companies sharing your data.
“There will be a cost and we’re looking at what that cost will be,” said Dr Webb.
Newshub can reveal how the Government wants to recover some of that cost – fees and giving itself a new power to put a levy on banks.
“It’s quite traditional for banks to pay for regulatory costs to operate in the market,” said Beaumont.
Just don’t call it a tax.
“Back to school, a levy is not a tax – they’re entirely different,” said Dr Webb.
Entirely different mandatory payments to the Government.