Banks facing ACCC inquiry over rates
THE Federal Government will once again go after the banking industry, calling in the ACCC to investigate profiteering after the four big banks failed to pass on this month’s official interest rate cut in full.
Treasurer Josh Frydenberg will today announce the inquiry, which will look at the cost of residential mortgages, and how it can be made easier for customers to switch to banks with better rates.
The inquiry will also look at the so-called “loyalty tax’’ which sees existing customers slugged more for their home loans than new customers.
The second inquiry into the conduct of the banks comes just nine months after the conclusion of the royal commission into banking misconduct, and appears to have been triggered by the refusal of the four big banks — Westpac, ANZ, NAB and the CBA — to pass on the full interest rate cut handed down by the Reserve Bank early this month.
The move, which saw Prime Minister Scott Morrison accuse the banks of “profiteering’’, pumped millions of dollars into the banks’ coffers, and deprived mortgage holders of hundreds of dollars a year in savings.
The Australian Competition and Consumer Commission will inquire and make an interim report in March and a final report in September.
“The failure of the banks to fully pass on the recent rate cuts to their customers when their cost of funds have come down significantly leaves them exposed to the charge that they are putting their profits before their customers,” Mr Frydenberg said.
“This is not a good outcome for either their customers or the economy as a whole, and comes just months after the Royal Commission shone a bright light on misconduct in the banking sector.”
The Government and RBA were hopeful the October rate cut would stimulate spending in the economy and were infuriated when the four big banks, which hold about 75 per cent of Australia’s residential home loans, only passed on about half the cut. Of the 75 basis points cut by the Reserve Bank this year, the big four have passed on only 57 points.
The banks argue their profit margins won’t allow them to cut further due to the impact on savers’ returns. The Government is unconvinced and has directed the ACCC to use its powers to extract information from the banks, with a view to making it easier for customers to get a better deal.