Banks bashed

THE big banks will have to cough up an extra $ 6.2 billion in taxes over the next four years to pay for a crackdown on customer rip- offs.

Treasurer Scott Morrison last night pitched the additional revenue and beefed up competition regulations as a way of forcing banks to give their customers a better deal.

The banking regulator will have the right to vet the background of executives and the incentives they are paid, as well as fine employers up to $ 200 million if their staff are caught ripping off customers.

The new levy will add up to $ 400 million to the annual tax paid by the Commonwealth Bank, Westpac, NAB, ANZ and Macquarie. However, there is no measure in the package to stop the banks from passing the additional cost on to their customers through higher priced products, including mortgage interest rates.

“We want customers and taxpayers to get a fairer deal from our banks,” Mr Morrison said. “For the system to be fairer, there needs to be greater competition and accountability – now.”

The banks are expected to fiercely fight the new levy, with the Australian Banking Association chief executive Anna Bligh saying yesterday it would fight any measure which singled the sector out for an additional tax. It’s likely they will hone in on how the Government has conceded it would use the $ 1.5 billion extra raised each year in revenue to pay for “budget repair”.

Seven multinational giants, including Google and Facebook, are also in the Government’s sights to pay more tax, with Mr Morrison promising to continue the crackdown which has so far raised $ 2.9 billion this financial year.

The bad banks tax is part of a sweeping package of reforms unveiled in the Budget.

Mr Morrison said the new levy – charged at 0.06 per cent of the biggest five banks’ liabilities and hitting their books from July 1 – would offset about half of the $ 13 billion in dud revenue measures it was yesterday forced to drop from the 2014 Budget.

However, he stopped short from forcing the naming and shaming of executives or fining the individuals with oversight of customer rip- offs.

Instead he is giving the Australian Prudential Regulation Authority power to check up on their pay. APRA will also have the power to immediately force the removal of bad executives, rather than being forced to take action against them in the Federal Court.

A new authority will also be established to adjudicate disputes with customers.