The big ASX banks of Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) face an ACCC inquiry.
The Australian Competition and Consumer Commission is Australia’s competition regulator and national consumer law “champion”. Its role is to enforce the Competition and Consumer Act 2010 and a range of additional legislation, promoting competition, fair trading and regulating national infrastructure for the benefit of all Australians.
Why The ACCC Is Looking At The Big ASX Banks
Today, the Treasurer directed the ACCC to conduct an inquiry into home loan pricing. The Treasurer directed that the Inquiry cover the period from 1 January 2019.
The big banks have been facing a lot of pressure because they didn’t pass on the full interest rate cut to borrowers.
Now it seems the Treasurer is wanting to put a bit more pressure on the banks for their lack of the interest rate cut.
The ACCC will be looking at a number of things. It will be looking at the prices charged since the start of 2019 including the differences between the prices advertised and the prices actually charged or paid, and the difference of prices charged to existing customers compared to new customers.
The banks will be examined about their decisions after the RBA interest rate changes – how much of it was due to the banks’ own financing and what was the timing of their announcements and the implementation of those changes.
The ACCC will look at bank practices and strategies that create impediments for existing borrowers to refinance to an alternative financier.
It will also be looking at the availability of public information about prices actually being charged.
What Has Happened To The Big Banks This Morning?
The CBA share price is up 0.9%, the ANZ share price is up 1.1%, the Westpac share price is up 0.7% and the NAB share price is up 0.9%.
I don’t think investors are positive about an ACCC inquiry, but it seems the upwards share market movement is having a stronger effect than the ACCC news.
This inquiry shows that the big banks are going to find it harder to be as profitable as they have been in the past. They’re under pressure to keep the interest rate (and therefore the net interest margin (NIM)) as low as possible. They’re also being told to hold more capital to be safer.
I’d prefer to buy the reliable shares in the free report below over the banks which I think have better long term futures.
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