The cost of a new "tick and flick" service designed to make switching financial institutions easier will be absorbed by the banks, federal Treasurer Wayne Swan says.
The new service will remove the burden of having to change the details of automatic debit and credit transactions, Mr Swan told reporters in Brisbane's northern suburbs on Sunday.
Instead, customers will sign one form that authorises their new financial institution to transfer all automatic transactions and inform associated creditors and debtors about the new account details.
The Australian Bankers Association (ABA) on Sunday confirmed the industry would work with the federal government to develop a streamlined transaction account switching service for customers.
The measure would need a lot of behind-the-scenes changes from banks but costs would not be passed on to consumers, the association's chief executive Steven Munchenberg told reporters in Melbourne.
"There will be costs associated with that, but they are quite small relative to what the other costs would have been, and I don't think we will be seeing customers charged anything for this service," he said.
The initiative would be much cheaper than others investigated in a report by former Reserve Bank governor Bernie Fraser, commissioned by the federal government, he said.
That report found full account number portability, allowing consumers to keep their account number when switching institutions, would impose huge costs on business and consumers.
Mr Swan said banks would "do the heavy lifting" and absorb any additional administrative costs.
"Banks will be out there wanting to do this, they're not going to be out there discouraging people from doing it," Mr Swan said.
"If they want to get you people through the door, then they've got the incentive to go and do the work.
"This is a very competitive arrangement."
Opposition treasury spokesman Joe Hockey said the Gillard government was promising one thing, while the end result may be quite the opposite.
"Increasing the regulatory burden and compliance costs will simply see these costs passed onto customers in the form of higher fees and interest rates," Mr Hockey said in a statement.
"Australians deserve a comprehensive approach to banking reform, instead of this knee-jerk, ad-hoc and piecemeal approach offered by the government."
But Mr Swan said there was substantially more competition in the banking sector as a result of Labor's reform agenda.
"People should be shopping around because it hasn't been this competitive for some time," Mr Swan said.
"What we've been about is giving people choice.
"People who are not happy with their financial institution want to be able to walk down the road and get a better deal.
"And this removes the hassle involved in that process."
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