Swan demands banks cut fees - or else

TREASURER Wayne Swan has told the big banks to lift their game and lower their fees or else he will do it for them.

Swan demands banks cut fees - or else

AUSTRALIA'S profit-rich banks have been warned they face a new wave of regulation if they fail to cut fees and make it easier for customers to switch lenders.

Laying down a big challenge to the finance sector, Treasurer Wayne Swan has called on the banks to review their existing fee structures.

Mr Swan has promised fresh laws if they don't make it easy for customers to switch home loans and other accounts.

In a bluntly worded letter to the CEOs of Westpac, Commonwealth, ANZ, NAB and St George, he said he would consider regulatory options.

The Government's tough attitude follows a review of bank fees, which found Australian customers were paying more for services than in Britain and the US.

The Government is sensitive to claims it is not doing enough to protect consumers and is calling on the banks to review their fee structures.

"I would encourage lenders to review their existing fee structures, especially where exit fees are high relative to industry averages and might not reflect the underlying cost of terminating the loan," Mr Swan said, in his letter.

He also called on the banks to look at ways to provide simpler fee wording to customers and improved fee disclosure.

"I am committed to an industry-based solution to remove impediments to (bank) switching," Mr Swan said.

"However, I am also prepared to consider the regulatory options that will be available to the Government following (the) decision the Commonwealth assume responsibility for the regulation mortgage credit and advice."

Last night the banking sector challenged the Treasurer over fees, claiming Australia was competitive.

David Bell, chief executive of the Australian Bankers Association, said he did not want to comment on Mr Swan's motivation.

But Mr Bell rejected suggestions the banks were price-gouging customers.

"I don't believe the banks are charging excessive fees. It is not a simple matter to set up a home loan for someone," he said.