FSU repeats call for banking reform after interest rate rise

The Finance Sector Union (FSU) has called on the banks to show restraint regarding interest rates, although reform of the entire banking system would deliver a fairer more transparent banking market, according to FSU national secretary Leon Carter.

Carter made the statements following an announcement by the Commonwealth Bank yesterday that it would lift its variable rate by 45 basis points (bps), a raise that exceeded the official cash rate rise of 25bps announced by the Reserve Bank of Australia.

Treasurer Wayne Swan described Commonwealth Bank’s decision as a “cynical cash grab”.

“I think Australians deserve a lot better, especially on Melbourne Cup day, than to have this sort of cynical decision from the Commonwealth Bank,” said Swan, adding that it was little wonder that so many Australians were so angry with the banks.

Carter said recent bank announcements revealed that the major banks were “incredibly profitable”, which was partly due to them increasing their interest rates above the official rate.

“While the level of indebtedness is at high levels and the profits of banks is at record levels, we need to see the big four banks in particular heed the calls of their customers to be responsible,” Carter said.

Carter stated than an Essential Report, released by Essential Media on Monday, revealed that 82 per cent of respondents felt that banks should only be permitted to change interest rates in line with Reserve Bank rates. Some 83 per cent also felt that banks should stop offshoring jobs. Carter said the Essential Report supported the FSU’s and Finsec’s Better Banking survey conducted earlier this year.

“As part of our campaign to promote Better Banking we have been calling on all members of the Commonwealth Parliament to pass legislation that reforms the banking system to deliver a fairer and more transparent banking market for both workers and consumers,” he said.

Swan stated that poor consumer sentiment towards the banks had resulted in the Government concentrating on making the banking system more competitive, since the global financial crisis had resulted in that system being more concentrated.