Consumers to be able to challenge banks

Consumers will be able to challenge "unfair" contract terms including bank exit fees
under a proposed federal government law.

The terms, which apply to standard-form contracts, include indirect costs such as
exit, default and penalty fees, a statement from Assistant Treasurer Chris Bowen
says.
The confirmation comes as pressure is mounting for banks to do more to win back the
trust of the community after their refusal to pass on any substantial interest rate
cuts recently.
The proposed law means consumers could be able to leave banks without paying penalty
fees, if their bank refuses to pass on interest rate cuts.
"This new law will finally give all Australian consumers access to protection from
unfair contract terms in standard-form contracts," Assistant Treasurer Chris Bowen
said in the statement.
Consumers were often frustrated by high penalty or bank fees, however they may be
able to "find redress" in the new laws, he said.
Under the provision, a term will be deemed unfair when it causes "a significant
imbalance in the parties' rights and obligations arising under the contract and it
is not reasonably necessary to protect the legitimate interests of the supplier".
The push for greater accountability of banks comes after the Commonwealth Bank on
Friday announced it would chop the package of its chief executive Ralph Norris by 10
per cent and senior executives by five per cent.
The bank will also introduce other measures to prevent widespread redundancies,
including restricting wage rises to those earning less than $100,000 to just 1.5 per
cent.
Mr Swan welcomed the bank's decision and encouraged other banks to follow.
Opposition Leader Malcolm Turnbull has backed Mr Swan, urging bank executives - and
other bosses - to cut their pay before that of lower-paid workers, the Sun-Herald
reports.