The first step is to lodge a complaint directly with the bank. The second is to switch to another bank
There was pressure from investors this week for more of the Westpac board to resign in the wake of Austrac revealing the company allegedly breached anti-money laundering and counter-terrorism finance laws 23m times, for $11bn in transactions, including several involving child abuse.
Investors have already pressured the chief executive, Brian Hartzer, into resigning, and the chair, Lindsay Maxsted, to bring forward his departure.
The moves come after a series of other scandals at the other major banks, and a scathing royal commission report earlier this year, which may have customers questioning who they do their banking with.
While it might be easy for investors to throw their weight around and get action from the bank, customers only have a couple of options to voice discontent.
Gerard Brody, the chief executive of the Consumer Action Law Centre, told Guardian Australia the first step for customers unhappy with Westpac is to lodge a complaint directly with the bank. The second move is to switch to another bank.
The difficulty is, most of the banks have had issues.
“Scandals have hit nearly all the banks,” Brody said.
“The CBA smart deposit machines similarly allowed wide-scale breaches of anti-money laundering [laws]. As demonstrated by the banking royal commission, there have been a range of other scandals – from the notorious ‘fees for no service’ on investment and superannuation products, to widespread mis-selling of junk insurance requiring millions of dollars in remediation.”Advertisement
“These scandals have been in all the big banks.”
It is “disturbing” for customers that Westpac didn’t heed the warnings of the Commonwealth Bank scandal, Choice policy and campaigns adviser Patrick Veyret said.
“They allegedly continued to break the law until as late as June this year,” Veyret said.
Another problem is a lot of the smaller banks are also linked to the big four. Westpac owns St George, Bank of Melbourne and Bank SA. Commonwealth owns BankWest and NAB owns UBank.
“The banks create a false perception that there are lots of options in the market by using multiple brands or ‘white labelling’ products,” Veyret said.
“The best way to escape is to do your research about ownership – check to see if the little bank you’re looking at is really independent.”
“[Ownership] isn’t always clear from their marketing,” Brody said.
“However, there are a number of other smaller banks that are not owned by the big banks, and there are also international banks in the Australian market.”
Veyret said ING and Suncorp are two mid-sized banks that options away from the big four, and there are several customer-owned banks that focus on returning profits to members rather than shareholders.
There is still a perception that changing banks is a hassle, and customers tend to be “sticky” when it comes to who they bank with, Brody said.
Some of the hassle is being removed from the process, however. Consumer Data Right laws that came into effect in July this year are slowly making it easier for customers to switch banks.
As of July the big four banks have began providing customers with their transaction data to help their move. It will be a requirement for the big four banks to provide customers access to their data across all accounts, bar mortgages, from February next year, with all data to be available from the big four from February 2021.
“Under the ePayments Code, banks must help existing and new customers when they switch their accounts between financial institutions,” Brody said.
The existing bank can provide you with over a year’s worth of direct debit, credit and payment histories, and the new bank can help you notify organisations you have accounts with that you are moving.
“Our research has found that people who have switched banks found it straightforward and in many cases an easy process,” Veyret said.
Banks are also required to allow you to cancel a credit card online, provided you pay the outstanding balance.
Veyret said customers should look at banks that have no monthly fees and unlimited free ATM and Eftpos transactions and transactions accounts should be linkable to a savings account with a reasonable interest rate.
The process for moving home loans requires people to go to the new bank and get the home loan. The new bank can then arrange for the previous loan to be paid out and closed.
Home loans are the biggest way to send Westpac a message, Veyret said.
“Mortgages account for the largest source of income for Westpac,” he said.
“What sends the clearest message to Westpac executives that their behaviour is unacceptable is when a Westpac mortgage holder switches banks. This will make the bank stand up and take notice.”
Veyret said if customers are pressured to stay with the bank when trying to close their account, they should stay strong.
“They may ask you why you’re leaving or try and get you to speak to a ‘retention team’.
“Stay strong – you don’t have to provide any explanation about why you’re leaving if you don’t want to.”
There isn’t an easy way to avoid Westpac entirely, though, if your employer uses the bank to pay your salary, or if the state governments use them.
“Many stores that you use may bank with them, so you may have to use a particular bank’s payment facilities,” Brody said. “However, you can have an impact by switching away your banking and service from them.”
Veyret said the market in Australia was very interconnected, but moving banks sends the clearest message to Westpac.
It doesn’t appear as though banks have seen much of a hint from customers that they want to switch, just yet. Those contacted by the Guardian Australia declined to comment, or said it would be too soon to tell.
Westpac did not respond to a request for comment.