28 October 2015
Consumer advocacy group CHOICE is calling on the Federal Government to bring forward the review of competition in Australia's banking sector planned for late 2017 and address the competition vacuum that is costing consumers.
"Today the National Australian Bank announced an after-tax profit of $6.3 billion, up 20 per cent from last year. Just last week it hiked its mortgage rate by 17 basis points, costing mortgage holders," says CHOICE Campaigns Manager Erin Turner.
"NAB is increasing profits and consumer costs at the same time. Its behaviour, along with that of the other big four banks, shows a major lack of competition in the banking sector."
"Depending on the size of their mortgage, customers with NAB face paying hundreds more each year because of the rate rise. Put simply, NAB is gouging its customers. Rather than compete to give consumers a great product at a fair price, NAB hiked rates when it wasn't required."
As part of the response to the Financial System Inquiry Final Report, the Federal Government has committed to review competition in the banking sector.
"No sooner was the Federal Government's response to the inquiry released than we saw co-ordinated, out-of-cycle rate rises from the big four banks, followed by a massive jump in profits.
"This is cynical behaviour. It's certainly not what a competitive market looks like.
"Consumers can't wait three years for competition in the banking sector. We have a problem now. CHOICE calls on the government to move the Productivity Commission review of competition in the banking sector forward to early 2016 to find real solutions to the great bank gouging exercise."
The Financial System Inquiry (FSI) was a once-in-fifteen-year review of Australia's financial system. The FSI recommended that the government review the state of competition in the sector every three years. In its response to the FSI Final Report, the government committed to task the Productivity Commission to review the state of competition in the financial system by the end of 2017.