Australia and New Zealand Bank (ASX:ANZ) yesterday became the first local bank to scrap its exit fee for mortgages. But this move failed to molify customers after it also lifted the interest rate on its standard variable home loans by 39 basis points to 7.8 per cent.

Finance Sector Union (FSU) Acting National Secretary Wendy Streets said, "Bank workers and customers are hurting unnecessarily.

"You've got our four biggest banks posting a combined profit of $21 billion and paying their executives more money each year than most people would see in a lifetime, wanting to take more from the community to fund the risk they take on our behalves and the cost of funding our loans."

"At some point you've got to ask, have they got the balance right? Bank workers and customers don't think they have," said Ms Streets.

"Australians want better banking."

A Better Banking survey conducted by the Finance Sector Union and Finsec in April this year revealed that 79 per cent of Australians would be more likely to vote for a political party promising to increase regulation around interest rates, and 66 per cent agreed that regulating interest rates is an issue that would influence their vote.

"They want a professional finance sector they can trust. A finance sector that is well regulated, and doesn't send jobs or personal data offshore. A finance sector that invests in skills and jobs, charges interest rates in line with the RBA and only charges fees that covers the cost of the actual service provided," said Ms Streets.

A recent Essential Report contained similar findings. On being asked about support for specific regulations for Australian banks: 93 per cent wanted banks to be required to let customers know if their personal data was being sent to other countries for processing; 91 per cent wanted regulation to ensure fees charged did not exceed the cost of providing a service 84 per cent want to cap CEO salaries; 83 per cent want banks stopped from sending jobs offshore; 82 per cent support banks being permitted to charge interest rates in line with RBA rates; and 74 per cent want tougher rules on providing loans and credit.

ANZ's decision to raise interest rates just a day after confirmation of more Australian finance jobs heading offshore demonstrates the need for banking reform, according to the FSU.

"It's time for the Federal Government to step in and increase regulation of our banking sector, for the good of bank workers and the broader community," said Ms Streets.

"Bank workers want better banking, bank customers want better banking, and there's a political imperative to increase regulation of our banks. What are they waiting for? The Federal Government must act now."