Big four uneasy about ban

Australia's big four banks may not be as comfortable with a proposed ban on mortgage exit fees as they are letting on, a Treasury official says.

Under the federal Government's proposed reforms to improve banking competition, exit fees on new standard variable home loans would be banned from July 1 this year.

Many small players have expressed concern about the financial impacts of the proposed ban.

ANZ and National Australia Bank have scrapped mortgage exit fees, while Westpac Banking Group chief executive Gail Kelly told a Senate committee into banking competition in January a ban was "not an overly big deal".

However, Treasury Department executive director of markets group Jim Murphy said yesterday the big four may be holding back concerns on the move.

"One of the institutions is continuing to argue, saying that's a poor policy response by the Government," he said.

"We have had consultations with one of the major banks who have told us they have had significant loss of business since they removed exit fees."

- AAP