Australia’s greedy big four banks are set to be probed over their repeated failures to pass on interest rate cuts to customers
- The government has ordered the ACCC to investigate banking interest rates
- Since May this year the Reserve Bank has cut interest rates by total of 75 points
- None of the major banks have passed on the full rate cuts to customers
Australia’s big four banks are to be officially investigated for repeatedly failing to pass on interest rates cuts to their customers in full.
The government will launch a probe into home-loan gouging with Josh Frydenberg telling the Australian Competition and Consumer Commission to find out why the banks are not lowering interest repayments in line with the RBA.
ANZ, National Australia Bank, Commonwealth Bank, and Westpac are the main focus of the investigation although smaller banks and lending institutions would be included.
Australia’s big four banks are to be officially investigated for repeatedly failing to pass on lower interest rates to their customers
With the banking industry still nursing their wounds from a scathing Royal Commission last year, they will now be forced to explain their mortgage pricing practices.
Since May the Reserve Bank has cut the cash rate on three occasions for a cumulative 75 points while the average passed on by the banking sector is just 57 points.
While the banks are not legally bound to pass on rate cuts by the RBA, the investigation will aim to shed some light on whether consumers are being treated fairly.
The financial sector has ignored repeated calls by the RBA and the government that the economy needed the rate cuts passed on to stimulate credit borrowing and growth.
‘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.’
‘With this new inquiry, the government is providing the banks with an opportunity to transparently account for their decision-making and how they balance the needs of borrowers, savers, shareholders and the wider community.’
The inquiry’s reporting date will be March 30 2020.
Since May the Reserve Bank has cut the cash rate on three occasions for a cumulative 75 points while the average passed on by the banking sector is just 57 points