The federal Treasurer wants answers from the banks over their lack of transparency on interest rate increases for savings accounts.
Treasurer Jim Chalmers has asked the Australian Competition and Consumer Commission (ACCC) to investigate if the banks are passing on a fair interest rate on savings accounts when interest rates rise, the Australian Financial Review reports.
“This is an issue I’ve asked the ACCC to take a closer look at this year,” Dr Chalmers said.
“Banks should treat their customers fairly when it comes to savings accounts.
Read: Australian super funds dominate global pensions report
“People who rely on their savings bore the brunt of very low rates in the past and they should see the benefits of higher interest rates now. It should be the silver lining in all of this.”
If you have money in the bank, he says it’s time to shop around.
Many of the so-called ‘second tier’ banks, such as ING and Bank of Queensland, have raised their interest rates while the big four have been dragging their feet. CBA’s highest ongoing savings rate is 3.5 per cent, compared to BOQ’s offering of 4.75 per cent, according to financial comparison site finder.com.au.
However, it pays to read the fine print as several of the current high-interest deals seem to be targeting younger savers with many of the offers for under-35s only.
“If your bank isn’t giving you a fair deal, I’d encourage you to look around for a better offer,” Dr Chalmers said.
Read: Age Pension change could make it easier to pick up work
He also encouraged consumers to access Consumer Data Right to compare interest rates.
Dr Chalmer’s threat to call the ACCC in on the banks sounds good, but will it achieve anything?
In 2019, then Treasurer Josh Frydenberg asked the ACCC to investigate why the banks were not passing on the full rate cuts to those with loans when rates were falling.
Not surprisingly, the ACCC found “maintaining profits” was a “major consideration” in the banks’ decision not to pass on the rate cuts.
However, the government then did not initiate or pass any legislation to improve consumer rights.
Read: Three life lessons for investors
Will this government be any different?
The Reserve Bank of Australia (RBA) meets every month except for January to review the official interest rate, with the next meeting set for 9 February.
In a press release after the December 2022 meeting, the RBA said that while inflation was expected to increase in the months ahead, it was then expected to decline for the rest of the year.
“The bank’s central forecast is for CPI inflation to decline over the next couple of years to be a little above 3 per cent over 2024,” the RBA said in the statement.
The board said its priority was to re-establish low inflation in the 2–3 per cent range over time.
However, it also said that while achieving a lower interest rate was the goal, it was not a “preset course” and it was closely monitoring the global economy, household spending and wages.
Does the banks’ lack of action on interest rates infuriate you? Do you shop around for interest rates? Why not share your tips in the comments section below?