ANZ, NAB, and Westpac have all welcomed the news of an Australian Competition and Consumer Commission (ACCC) investigation into banking.
Treasurer Josh Frydenberg has announced an investigation to look into how residential interest rates are calculated and why the banks are refusing to pass on rate cuts in full.
It also plans to investigate what factors are stopping customers from changing lenders.
According to Mr Frydenberg, the banks have consistently ignored advice from the RBA and the Government to pass on full rate cuts.
By only passing on partial cuts, Mr Frydenberg said that Australian mortgage holders are paying significantly more on their loan than if the banks shared the full cut.
“It’s costing someone with a $400,000 mortgage around $500 in higher interest payments than they otherwise should have to pay if these last three rate cuts were passed on in full,” he said.
The banks have welcomed the review, and Westpac’s Group Chief Executive, Brian Hartzer, said the group would actively participate in the inquiry.
He also took the opportunity to remind the public of the competing pressures banks face.
“Pricing decisions require banks to take into account a number of factors, particularly as the cash rate heads towards zero…we take into account the interest of borrowers, depositors and shareholders who provide the equity that enables us to operate,” he said.
Unanimously, the banks agree that it is a good chance for them to clear up any misinformation about their processes with consumers.
ANZ’s Chief Executive Officer, Shayne Elliot said that “despite intense competition, there is cynicism in the broader community about interest rates for home loans.”
“We know we have not done a good job in explaining our position and we will be working hard to ensure this process delivers results,” Elliot said.
NAB’s Chief Customer Officer, Mike Baird, said it gives them the opportunity to “discuss the challenges of an increasingly low-interest-rate environment” and to “engage in a broader discussion” about how they support both depositing and borrowing customers.
The ACCC is planned to deliver its interim report by 30 March 2020 and its final report by 30 September 2020.
Words by Kathryn Lee
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