Financial misconduct, transparency, and penalties for fees with no service have all come to light through the banking royal commission, with consumers now more aware of what banks can be capable of.
Financial experts explained how this will affect young people, and what can be done to stay on top of your finances.
Director of Lighthouse Capital, Julia Schortinghuis, says its important for major banks to rebuild trust.
“It (Royal Commission) was also necessary, so the bad behavior had to be called out in my view,” Ms Schortinghuis said.
“It will be interesting to see what happens in terms if there is criminal proceedings they are going to follow. But it was necessary so that we can now start to rebuild trust in the sector and that’s the most important thing.”
Certified Financial Planner Elson Goh believe loans will now be harder to access, along with most consumers tightening up on their every day expenditure.
Big banks will also have the upper hand over smaller institutions, as brokers are not being involved meaning less fees and less competition. Lack of market diversity will prove difficult to young people looking to get credit.
“Lending policies are usually centered around can you afford the loan, can you afford the repayments, and how much you are borrowing,” Certified Financial Planner and Curtin University tutor Elson Goh said.
“… Competition is very important because this is where it is good for consumers to see fees pushed down as low as possible, access to different types of products. One of the concerns is banks are quite homogeneous in terms of what they offer.”
“If you don’t fit the mould, you are stuck and that’s where all the banks and smaller lenders come in. They (small banks) are able to offer different services and products that suit niches that big banks can’t offer.”
Experts also say it is important for consumers not to be “constrained to the four major banks”.
This ensures better deals on offer thanks to competitive pressure.
More onus needs to be placed on young people, making them aware of what role their financial decisions will play in the future.