“People are fed up”: Treasurer Josh Frydenberg asks ACCC to investigate banks who fail to pass on rate cuts
Australian Treasurer Josh Frydenberg has asked the Australian Competition and Consumer Commission (ACCC) to investigate the banking sector for failing to pass on interest rate cuts to customers in full.
This comes after three official rate cuts since January, meaning that the new rate is a record low of 0.75 per cent.
Frydenberg has said that the big four banks, ANZ, NAB, Commonwealth Bank and Westpac have failed to pass on the rate changes in full to their customers.
"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," Frydenberg told Channel 9, according to The ABC.
"But it's not just these last three rate cuts where the banks have failed to pass them on, it's actually what's happened previously under the Labor government, there were 14 different rate cuts and only five of them were passed on in full.
"So clearly there's a structural challenge here, there's a pattern of behaviour and the Australian people are fed up."
Frydenberg has said that the ACCC needs to use its “particular powers to compel documentation to lift the hood and get to the bottom of this issue”.
Labor also welcomes the inquiry by the ACCC in principle, but is asking to see the details of the plan.
"Labor has been calling for the ACCC to play a bigger role here," Shadow Treasurer Jim Chalmers told AM.
"With record household debt and stagnant debt under the Liberals you can see why customers are frustrated at the banks for not passing through interest rate cuts.
"The big banks are still very profitable by international standards so they shouldn't be doing the wrong thing by borrowers.
"We want to make sure that those interest rate cuts can do good in the economy, that means having them passed onto consumers."
ANZ chief executive Shayne Elliot welcomes the inquiry.
"Despite intense competition, there is cynicism in the broader community about interest rates for home loans," he said.
"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."
Mike Baird, chief customer officer for consumer banking at NAB agrees, saying that the inquiry is “an important opportunity to discuss the challenges of an increasingly low interest rate environment and engage in a broader discussion about how we support all our customers— both depositors and borrowers".
Westpac has said it’s “too early to comment” and a spokesman for Commonwealth Bank has said that it was “currently digesting the implications”.