Australians concerned banks are too slow to pass on interest rate rises to savings accounts could have their frustrations validated after the national consumer watchdog launched an inquiry into the practice.
The Australian Consumer and Competition Commission (ACCC) on Wednesday announced it will investigate the way the country’s financial institutions set interest rates for saving accounts, at the direction of the federal government.
In announcing the investigation, the ACCC noted while banks have little delay in passing on official cash rate rises to mortgage customers, the same cannot be said for saving rates.
“As the cash rate target set by the Reserve Bank of Australia (RBA) has increased from 0.1 per cent to 3.35 per cent, in most cases banks have fully passed through the cash rate target increases to their home loan interest rates,” the ACCC said in a statement.
“However, the increases in interest rates on deposit products appear to have typically been smaller and less consistent.
“In many cases, banks have only applied increases in the cash rate to some of their deposit products, often with conditions attached.”
The inquiry will submit a report to Treasurer Jim Chalmers by the start of December, after consulting a number of stakeholders including the RBA and the Australian Securities and Investments Commission (ASIC).
An issues paper will also be released in the coming months.
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The announcement came on the same day Commonwealth Bank reported a record half-yearly profit of $5.15 billion, a nine per cent jump from last year.
The bank said the result was driven primarily by net interest rate margins.
“Higher interim cash profits were a result of volume growth and the recovery in our margins as cash rates rise from historic lows,” chief executive Matt Comyn said.
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”It’s the job of the central bank to control inflation, to make sure that inflation expectations don’t adjust and we avoid all those terrible things,” Lowe said.
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