Banks face tell-all rule

Crackdown on big four as ACCC digs deeper

BANKS’ secret internal reasons for hiking interest rates will be exposed under new powers forcing them to cough up confidential board reports and executive emails.

The unprecedented powers to delve into the big four banks, which the Turnbull Government has handed the Australian Consumer and Competition Commission, mean they will be forced to re- veal who signed off on home lending price hikes and why.

Should the banks follow through on their threat and pass on to consumers the cost of the Government’s $6.2 billion bank tax, the internal communications behind their decisions will be exposed.

“It’s a very important power that we have been given and will provide quite profound insights,” ACCC chairman Rod Sims said.

“We can get hold of really, whatever information we like in relation to what we’ve been asked to inquire into.

“We can get hold of board reports, we can get hold of internal emails.”

The Turnbull Government in the budget delivered the ACCC an extra $13.2 million over four years to fund a new financial sector competition unit to crack down on banks. Its first task is to inquire into the home lending market, to be completed in a year.

Prime Minister Turnbull and Treasurer Scott Morrison demanded the banks not pass on to customers the extra $1.5 billion a year they will be forced to pay the budget repair levy and warned the ACCC will be watching if they do.

Mr Sims said the bright spotlight could embarrass the banks into doing the right thing.

The ACCC will track whether the banks were justified in slugging home borrowers with higher interest rates while the cost to the bank to fund those loans remained flat. Coleman Parliamentary Standing Committee on Economics found 18 of 19 interest rate movements since 2000 have benefited the bank to the detriment of consumers.

“I don’t think competition in the banking sector is particularly robust in the sense that they all do things and behave in reasonably similar ways,” Mr Sims said.

“If competition is not robust, not only is it not good for consumers, it’s not good for the whole economy.”