Wednesday, June 22, 2011

Senate Rules on Exit Ban Fee

From the Mortgage Finance Association of Australia (MFAA)
Date 23/06/2011

Yesterday afternoon the Senate voted on a motion by the Coalition and Independent Nick Xenophon to disallow the Government regulation to ban exit fees. The strategy (backing the MFAA’s campaign over the past few weeks) was to bring the Government to the table to prepare an amended regulation which would have exempted smaller lenders from the exit fee ban.

Regrettably when the vote was taken, there was a 35-35 tie (Senator Fielding voted with the Government and the Greens). This meant that the motion failed and the ban on exit fees goes ahead from 1 July 2011.

In our lobbying with the Treasurer, the Greens and Senator Fielding, we were advised that they were all aware of our concerns about the lack of breadth of competition in the mortgage market, but felt that allowing exit fees to continue was not the appropriate way to deal with our concerns.

The Greens told us: “After much consideration, (we have) decided that the Greens can’t support Xenophon’s disallowance this week (thus upholding the Swan regulation re exit fees), but the Greens will be seeking further reforms from the Government to improve non-bank lenders’ access to finance.”

Although just unsuccessful by a whisker on this occasion, our campaign has certainly made a mark in Canberra and we will continue our campaign to improve the breadth of competition in the mortgage market.

Thanks to all our members who supported the advertising campaign, or supported our lobbying by writing to politicians. Your efforts have not been in vain.

The MFAA also thanks the Coalition and Senator Xenophon for taking up the cudgels on our behalf. In particular we give special thanks and appreciation to Nationals Senator John Williams for the hours of work he put in to convince the Coalition to take up the case and his continuing support in the Senate.

We’ve now made our point – the campaign for enhanced competition will continue!

Equitimax's View on this Decision
Any regulation that reduced Bank Fees is a good one.
However the problem with this bill was that it undermines Non-Bank Lenders profitabilities more than the major banks and therefore reduced competition in the market.  Rob & John

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