Committee to monitor interest rates on loans

Scrutiny of Australia’s four major banks (Commonwealth Bank, ANZ, National Australia Bank and Westpac) will continue, with the House Standing Committee on Economics to hold public hearings at least annually with bank executives.

The committee will consider a number of consumer protection issues, including:

• The financial position of borrowers and areas of potential vulnerability
• Interest rates paid on deposits and loans
• Ongoing implementation of recommendations from the Financial Services Royal Commission, and
• Actions to protect customers from scams

On the back of nine consecutive rate hikes and given the banks’ key role in the functioning of the economy, the chair of the committee, Mr Daniel Mulino MP, said ongoing scrutiny was vital.

Mr Mulino said the government continued to work on implementing the recommendations of the Hayne Royal Commission and that the committee was keen to hear from the banks on their responses.

The Financial Services Royal Commission, which reported in 2019, showed that far too often the banks did not live up to the trust that Australians placed in them.

The inquiry has followed calls from senators recommending that introduced schemes, such as the Financial Accountability Regime (FAR) and the Compensation Scheme of Last Resort (CSLR), face stronger parliamentary scrutiny.

For example, the CSLR was introduced to provide compensation to eligible consumers where they have an AFCA determination in their favour and where the relevant financial firm has not paid the consumer in accordance with the determination.

On Tuesday (25 October 2022), senators recommended that the Senate should review ways to manage the scheme given it “establishes an enormous moral hazard for consumers, the market and regulator”.

Other matters that the inquiry will raise include:

• Supporting the flow of credit, including to small businesses
• Operational performance, and
• Responses to climate change and supporting Australia’s progress towards climate and other sustainability goals.

Given Australians lost more than $2 billion to scams in 2021, Mr Mulino said, “We need to hear what extra consumer protection the banks are planning”.

Senate to hold regional banking inquiry

As the big four banks come under fire, a regional banking inquiry into the economic and welfare impact of branch closures in regional Australia has passed through the federal Senate.

The new inquiry will look at the economic and welfare impacts of branch closures in regional Australia, as well as the process banks are following to close branches and the reasons being given.

It comes as more than 450 regional banks have closed in the past five years, according to the Finance Sector Union (FSU).

The inquiry has been referred to the rural and regional affairs and transport references committee, which will report back to Parliament by 1 December 2023.

[Related: Banks told to do more amid regional closures]