CANBERRA, Oct. 14 (Xinhua) -- Australia’s competition watchdog has been directed to investigate the nation’s biggest banks less than a year after a landmark royal commission into the sector.
Treasurer Josh Frydenberg asked the Australian Competition and Consumer Commission (ACCC) to look into the banking sector’s decision to not pass full interest rate cuts on to customers.
The Reserve Bank of Australia (RBA) has cut interest rates three times in 2019 to a record low of 0.75 percent.
However, the big four banks have decided independently not to pass the cuts on to their mortgage holders in full.
According to the Australian Broadcasting Corporation (ABC) on Monday, they have passed on the equivalent of three quarters of the cuts.
"It's costing someone with a 400,000 Australian dollar mortgage around 500 AUD in higher interest payments than they otherwise should have to pay if these last three rate cuts were passed on it full," he said.
"But it's not just these last three rate cuts where the banks have failed to pass them on, it's actually what's happened previously under the Labor government, there were 14 different rate cuts and only five of them were passed on in full.
"So clearly there's a structural challenge here, there's a pattern of behaviour and the Australian people are fed up."
The RBA made the cuts in an attempt to stimulate Australia’s stalling economy.
The ACCC inquiry will come about eight months after the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry released its final report.
After 68 days of public hearings and more than 10,000 public submissions the inquiry concluded that misconduct in the sector was widespread and systematic.
While the royal commission was wide-ranging in its scope the ACCC will focus specifically on how the banks make pricing decisions and the differences in prices paid by new and existing mortgage-holders.
Frydenberg said that customers are “sick and tired of the merry dance” of rate cuts not being passed on but has ruled out introducing laws that would force banks to pass them on in full.
"We need the ACCC to use its particular powers to compel documentation to lift the hood and get to the bottom of this issue,” he said.
