There is something predictable about Australia's bank reporting season. As surely as our minds turn to office Christmas parties, days at the beach and cricket on the TV, we will witness a parade of record profits and executive remuneration packages.
These announcements seem to exist in a parallel universe to the cost-of-living issues dominating our daily media. Inevitably they arrive cloaked in corporate spin-doctoring, with grave warnings about stability and storm-clouds on the horizon. The implication is that to so much as question the bulging balance sheets of our "big four" banks is to embrace the yawning chasm of the European debt crisis.
Consumers have every right to test these assertions from the industry. At what point do record profits variously described as "solid", "good", "strong" or "sound" become "excessive" and "over the top"? Exactly where is the threshold between the kind of profitability required for safety and security, and the kind that squeezes household budgets for an essential service?
The 2011 super-profits season continued the recent trend, with ANZ reporting $5.36 billion, Commonwealth Bank $6.394 billion, National Australia Bank $5.2 billion, and Westpac $6.991 billion.
Bank bashing and the more resigned emotion of consumer cynicism are as rampant as ever: it's understandable when new customers are offered "honeymoon" rates, only to be dropped below market leaders soon after; it's hard not to when CBA put up rates by more than the RBA last year and NAB refuse to cut their rates in line with the RBA this year; and it's becoming "just typical" when UBank chooses to cut the interest rate paid to their USaver accounts by 40 basis points in response to the RBA 25bp cut.
Consumers feel they are ripped off and tend to think that contrary to NAB's highly public "divorce" from the others advertising campaign, that the campaign was itself divorced from reality.
Worn down by a complacent banking sector, consumer inertia leads to Australian households leaving an estimated $153 billion on deposit in low or no-interest transaction accounts.
In March this year, CHOICE laid down a challenge to Australia's banks, putting forward 14 recommendations for a more competitive, consumer-friendly banking sector.
Nine months on I am today writing to each of the banks to remind them of the key consumer demands.
These include removing the disproportionate charges at ATMs for onscreen balance inquiries; the need for much improved disclosure around banking products so people know what they are getting into; and top executives' remuneration to be linked to customer satisfaction.
This piece appeared in the Daily Telegraph
on 6 December 2011.