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Big 4 Banks face government review
This week will be a big one for the heads of Australia’s Big Four banks who will be facing the Federal Parliament’s House of Representatives Economic Committee for a review of the way in which they balance the needs of customers, shareholders and the broader community.
The banks have been embroiled in various scandals over the past year including those involving life insurance policies and their failure to pass cash rate cuts on to home loan borrowers. There have been calls from the Labour party to conduct a Royal Commission into the banking sector and this review will give the banks a chance to try and prove that it would not be necessary.
The review will take place over the next three days with the head of each major bank having their chance to explain their position. It is hoped that this will give the public a chance to understand some of the banking industry’s decisions that have recently been called into question.
The four main topics highlighted for discussion by the committee are the international and domestic market developments that relate to the Australian banking sector; developments in prudential regulation and how these will affect Australian banks; the cost of funds impacts on margins and the basis for bank pricing decisions; and how banks are currently responding to previously raised issues such as enhancing consumer protection, government reforms and actions by regulators.
There’s a lot of material for the review to get through over three days and for customers it may be hard to follow exactly what implications these discussions will have on their bottom line until the reviews conclusion.
Borrowers and savers alike no doubt have their own grievances to air with the Big 4. Also, with Australia currently having the largest amount of household debt of any developed nation, and most of this debt being tied up with the Big 4 Banks, it’s fair to say that making sure we have transparency and regulation across the sector is absolutely necessary.
For customers around the nation, answers to questions like what sort of commission are bank workers getting for selling us loans and why won’t the bank pass us our full rate cut on our home loans but savers get their interest rates slashed repeatedly, will be eagerly awaited.
This graph from the ABC also shows a worrying trend in that our personal debt, far from being paid off, is being shifted into other banking products, most likely to be paid back over longer terms.
And while the amount of debt we take on may be considered our own “fault” what about the way in which new credit cards, credit increases and other such banking products a marketed to vulnerable customers?
The next three days will hopefully provide some insights into the way the banks view these issues and what customers can expect going forward.
Disclaimer
This article is over two years old, last updated on October 4, 2016. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent personal loans articles.
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