CHOICE says it’s time for some honesty in bank funding costs debate
CHOICE says comments today from the Reserve Bank of Australia blow the whistle on the industry’s excuses for recent interest rate rises.
RBA Assistant Governor Guy Debelle made the comments in a speech delivered in Sydney, saying that recent increases in lending rates have “been with the aim of maintaining profitability.”
CHOICE says this flies in the face of attempts from the banking industry to say they have had no option but to slug consumers with higher costs.
“While the RBA paints a detailed picture of the ups and downs of bank funding costs, the bottom line is that banks want their profits to be immune to these changes by passing costs on to borrowers,” says CHOICE head of campaigns Matt Levey.
“Of course the big banks would rather have a debate about funding costs than talk about profits, or more importantly, competitiveness.
“That’s why CHOICE is calling on consumers to shop around for a better deal beyond the big four in our Move Your Money campaign, because the more genuine competition in the market, the more pressure there is for banks to balance consumer and shareholder interests.”
The banking industry has also leapt on the RBA’s comments that funding costs have increased, using them to suggest current profitability is “the only way Australia can have a safe and stable banking system.”
But CHOICE says this is more evidence of why consumers should shop around for a better deal and not let the big four banks take them for granted.
“There is nothing magical or sacrosanct about current levels of bank profitability in Australia, but every time anyone so much as questions it, we hear a chorus from the industry about the need for safety in uncertain times,” Mr Levey says.
“The fact is we all want healthy and profitable banks, we all want stability, but some in the industry seem to think that should mean a blank cheque to pass on as many costs to consumers as possible.”
CHOICE says consumers should increase the competitive pressure in Australia’s banking system by shopping around for a better deal and signing the CHOICE Move Your Money petition at choice.com.au/moveyourmoney
 See http://www.rba.gov.au/speeches/2012/sp-ag-220312.html
 See Australian Bankers’ Association Inc. media release, ‘RBA confirms banks’ funding costs are higher’, 22 March 2012