The big four banks – ANZ, Commonwealth Bank, National Australia Bank and Westpac – made only modest reductions to their standard variable mortgage rates of 0.10 per cent to 0.14 per cent.
Influential crossbench senator Nick Xenophon believes the big banks would be more likely to pass on the full extent of interest rates cuts if the Murray financial system inquiry’s recommendations were implemented.
These include dealing with the unfair cost advantage they have over smaller banks by virtue of the way they are treated by ratings agencies.
“Right now the ‘four pillars’ are like a big brick wall when it comes to passing on the full extent of rate cuts to consumers,” Senator Xenophon said in a statement today.
“If only the banks were as quick in cutting rates when they go down as they are at increasing them when the cash rate goes up.”
He said if the Turnbull Government failed to act soon on the recommendations of the FSI he would introduce legislation to “level the playing field so regional and co-operative banks had a fighting chance to compete more fairly for the benefit of consumers”.
It comes at a time when Labor has been pressing for a royal commission into the banks in the wake of a string of financial scandals.
Shadow treasurer Chris Bowen admits only the Prime Minister and his cabinet can call a royal commission – the parliament can’t.
“But we can apply continued pressure on the Prime Minister and treasurer to deal with this issue,” Bowen told ABC radio.
The Government has repeatedly dismissed the idea of a royal commission.
Liberal frontbencher Simon Birmingham said the Australian Securities and Investments Commission already had the powers of a royal commission that could uncover wrongdoing in our banks and ensure prosecutions occur if needed.
“We really should be backing that authority,” Senator Birmingham told Sky News.
However, Birmingham said banks should not be profiting from a cut in the official cash rate and must justify the rationale for not passing on the reduction in full.
Peter Arnold from financial product comparison website RateCity.com.au said the decisions of the major banks were “disappointing” and meant about 80 per cent of all variable home loan customers would miss out on some of the savings.
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