SYDNEY, Aug 4 Australian bank chiefs will be interrogated by parliament each year to help improve industry accountability, the prime minister said on Thursday, an initiative that could help the country’s highly profitable lenders dodge a sweeping public inquiry.
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Treasurer Scott Morrison said he had spoken to all the banks on the issue. “They are built on a foundation of trust and they have to earn that trust through being open and accountable at all times”.
Banks have been attacked over mis-advice to wealth customers and were criticized by lawmakers across the political spectrum this week for failing to pass on in full the central bank’s latest quarter-point interest rate reduction.
The four major banks will be called to appear regularly before the parliament’s economics committee on a regular basis.
The government criticised the banks for holding on to a combined total of more than $900 million after passing on only half of the Reserve Bank’s 0.25 percentage point rate cut – now at a record low 1.5 per cent – to mortgage holders on Tuesday.
“What this will do is create a regular and permanent method of accountability and transparency for the banks”, says Turnbull.
Mr Turnbull said requiring banks to justify their actions in person to politicians would “drive some cultural change”. He noted that the committee could have additional hearings and call people back.
‘The banks should have passed on the full rate cut, ‘ Mr Turnbull said. “So there’s been an appropriate assessment and consideration of how this process would work”.
The four banks said they would boost deposit rates to attract more savings, helping them reduce dependence on offshore markets where borrowing costs have shot up.
He said that in making interest rate decisions “banks have to balance the needs of borrowers and savers, and shareholders in banks, most of whom are also ordinary Australians”.
Opposition Leader Bill Shorten has ramped up his demand for a royal commission into the banks.
Mr Turnbull said earlier in the week that banks ‘operate with a very substantial social licence, ‘ he said. “This is a friendly catch-up, not an investigation”, Shorten said.
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“Let’s call this for what it is – it’s what you do when you want to be seen to be doing something but can’t possibly be seen to call a Royal Commission into the financial services sector”, Shadow Treasurer Chris Bowen said in a statement.
