Financial comparison websites will be forced to disclose their relationships with banks under a series of changes announced by the federal government.
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The changes come after two inquiries, one of which found some banks are paying about $10 per click to be featured on comparison websites.
Other measures announced by the government will make it easier for customers to switch loans and find cheaper interest rates.
Treasurer Jim Chalmers said the changes will provide better choice and lower prices for banking customers.
"They will help create a more dynamic, diverse and resilient Australian banking sector, which is good for consumers, good for industry and good for the economy," Dr Chalmers said in a statement.
The federal government introduced the changes in response to two Australian Competition and Consumer Commission reports, which together provided 11 recommendations.
The Inquiry into home loan pricing was completed in 2020 under the coalition government. Mr Chalmers said the former government never responded to the inquiry.
The ACCC's Inquiry into retail deposit products, commissioned by the Albanese government, was completed in December 2023.
The latter inquiry found comparison websites are one of the main sources consumers use to search for new banking accounts.
"Comparison websites including Canstar, Finder, Rate City, Mozo, and Savings.com enable consumers to compare retail deposit products," the report stated.
It found many banks had commercial relationships with comparison websites, including "cost-per-click" arrangements that see some sites receive an average $10 per click, regardless of whether the customer ends up opening an account.
Comparison websites can earn up to $400 per acquisition if a customer decides to open an account through their recommendation, the inquiry found.
Under the government's changes, financial comparison websites will be required to better disclose how products are ranked and the financial relationships they have with recommended lenders and banks.
Switching loans to become easier
Banks will also be required to tell customers when their interest rate changes on transaction or savings accounts.
The government will work with banks to improve how they inform customers of bonus interest rate offers and when a lower interest rate ends after an introductory period.
This may include the development of industry standards, the Treasurer said.
![Treasurer Jim Chalmers pictured in May. Picture by Elesa Kurtz Treasurer Jim Chalmers pictured in May. Picture by Elesa Kurtz](/images/transform/v1/crop/frm/146508744/9e0c616d-b45d-4732-a74d-b0accd2b6ea6.jpg/r0_0_4837_2721_w1200_h678_fmax.jpg)
Customers will have better access to mortgage exit forms, making it easier for them to switch loans.
The government will also ask Treasury to investigate ways to encourage customers to switch to cheaper loans, through the use of behavioural economics and prompts.
Review into small, medium banks
The Treasurer also announced a review into small- and medium-sized banks, which will be led by the Council of Financial Regulators in consultation with the ACCC.
It will assess the role smaller banks play in increasing competition in the financial sector and the challenges they face.
"It will propose ways to improve regulation and ensure that oversight of these banks appropriately balances competition, innovation, and stability," Dr Chalmers said in a statement.