Cutting exit fees is only half the battle in the banking competition, according to a national accounting firm.

While plans to abolish mortgage exit fees is a good first step in increasing banking competition, Chan & Naylor says more action is needed.

The firm's comments come after the Australian Securities and Investments Commission's yesterday released the paper: "Guidance for Mortgage Lenders on Early Termination Fees," in an effort to stop banks profiting from exit fees.

However, Chan & Naylor chief executive Sal Carrero said "The real pain comes in the form of loan breakage fees for those seeking to exit fixed-interest loans."

"Many homeowners are prevented from moving to more competitive products due to breakage fees which are often in the tens of thousands for a typical loan.

"This is a clear example of fee gouging as the penalty imposed on the consumer does not reflect the cost to the bank. There is no transparency around this issue.

Mr Carrero said thousands of Australian homeowners who fixed their loans when interest rates were higher are prevented from moving to more competitive loans due to breakage fees.

"Australia desperately needs a more competitive lending environment, where consumers can easily switch between products in search of better offers.

"This anti-competitive approach of the Australian banking industry would not be tolerated in other established markets in Europe, America and Asia.

Mr Carrero said homeowners should consult their accountant if they are experiencing difficulty in managing cash-flow and loan repayments.

"It's a shame that it takes the threat of regulation to make the banks act in the interests of consumers," he said.