Day 363: 'Picking on the banks - not a lot of sympathy'
An introductory weekday newsletter from Schwartz Media. Counting the days since the banking royal commission was established.
Good afternoon and welcome to day 363.
Today in summary: competition regulator finds loyal mortgage customers paying more; super fee disclosure changes delayed again; and Senate inquiry hearings into payday lending and credit repair companies kick off tomorrow.
-- Charis
Current banker panic level: 😨😨
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Almost 18 months on from the government legislating its bank levy, the ACCC has reported on mortgage pricing. It found the bank levy was not being passed onto customers through mortgage interest rates, but slammed the opacity of mortgage pricing, which it says is stifling competition in the sector. The competition regulator also found the banking royal commission was driving more customers to speak up, with 11% of borrowers with variable rate mortgages able to get their residential mortgage reduced by one of the five big banks in the year to June.
The ACCC found the majors collectively banked around A$1.1 billion in revenue from increasing interest-only mortgage rates after APRA sought to limit new interest-only lending. ACCC Chair Rod Sims said:
“Such is the oligopolistic nature of banking that the banks all took the opportunity to increase rates on both new and existing interest-only mortgages, despite APRA’s measures only applying to new lending.”
Sims is optimistic the Consumer Data Right, yet to be legislated by the government, will empower consumers and make it easier for them to compare rates.
Meanwhile, better fee disclosure in the superannuation sector has been pushed back, after ASIC said it would give the industry more time to comply with controversial RG97 disclosure rules. The rules have been criticised by the industry for being too complex, and ASIC bought in independent expert Darren McShane to review them. The regulator will now release another consultation paper in January, and give companies until 2020 to comply.
Senate inquiry hearings into payday lending, buy now, pay later credit and the credit repair industry will kick off tomorrow, after consumer groups flagged these areas being overlooked by the Hayne royal commission. The Senate committee is due to report in February next year, and will this week hear from Financial Counseling Australia, Cash Converters, Maurice Blackburn Lawyers and Credit Repair Australia, among others.
Today’s burn prize: economist John Freebairn
🔥🔥🔥
"That's a big break for domestic companies, that's a big political plus. Picking on the multinationals - not a lot of sympathy; picking on the banks - not a lot of sympathy."
A proposal by economists Ross Garnaut to replace traditional company profits tax with a cash-flow tax has received little support from government, Labor and big business. The plan, backed by Industry Super Australia chief economist Stephen Anthony, would see banks making above normal returns on capital taxed more heavily, and deny multinational tax avoiders deductions for imported services.
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