The final report from the inquiry into price gouging and unfair pricing practices has criticised the Australian banking sector.
25 July 2024
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The final report from the inquiry into price gouging and unfair pricing practices has criticised the Australian banking sector.
Published this month, the report says the insufficient competition in our banking sector has led to poor outcomes for customers and higher prices.
A clear example is how the banks responded to the RBA’s changes in the cash rate over recent years. When the RBA raised cash rates, banks increased their standard variable rates in lockstep. But when rates went down, the corresponding rate drops were far slower!
In fact, the big four banks are so shielded from competition they’ve seen increasing profit margins over the entire period of increasing rates from May 2022.
Banks were able to achieve higher profits through the entire period of the pandemic than they experienced on average in the 15 years before the pandemic – taking into account the mining boom period, the GFC, and the recovery.
Following the ACCC’s recent inquiry into retail deposits, the report stresses the need for greater price transparency. The ACCC’s main recommendations were for continued monitoring of prices and competition in retail deposits.
The report is a gripping and often appalling read. See the full report here.
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