By Juliano Oliveira
The ACCC (Australian Competition and Consumer Commission) is going to conduct an investigation into the banking sector in Australia over the pricing of residential mortgage products.
The inquiry involving financial institutions was requested by the treasurer Josh Frydenberg and covers the period from 1 January 2019.
Speaking with Channel 9 this morning (14/10), the treasurer said that the banks are not passing on the Reserve Bank rate cuts in full. Since January, the Reserve Bank has reduced the official rate three times to a new record low of 0.75%.
“Well, what the Banking Royal Commission did was shine a light on the misconduct in the banking sector. What this inquiry by the ACCC is something different and will better understand why the banks are not passing on the RBA rate cuts in full. You see, the Australian people are sick and tired of this merry dance where the Reserve Bank reduces interest rates, politicians and the Bank itself call on the big four to pass on the rate cuts and the big four ignore the RBA and don’t do that”.
Asked about how much this “misconduct in pricing” has been costing the average homeowner and the economy, Mr Frydenberg exemplified the issue by saying that “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”. The commission is also planning to investigate the barriers that may prevent consumers from switching lenders.
The Government has provided the ACCC with $13.2 million to undertake regular inquiries into specific competition issues within the financial system. The ACCC will deliver a preliminary report by 30 March 2020 and a final report by 30 September 2020.