Big banks continue to milk Australians as competition collapses under Kevin Rudd

March 23, 2010

Consumers continue to be exploited by the big four banks as a result of the Rudd Government’s failure to engender competition into the banking sector, Shadow Minister for Consumer Affairs, Financial Services, Superannuation and Corporate Law Luke Hartsuyker said today.

Mr Hartsuyker was commenting on media reports that Westpac is set to charge interest on interest and fees incurred on credit cards.  “On Kevin Rudd’s watch, the big four banks are milking Australians dry,” Mr Hartsuyker said.

“Over the past six months we have seen them hike up mortgage interest rates above the increase in the Reserve Bank’s cash rate. Last December Westpac raised its rates 20 basis points higher than the Reserve Bank’s increase. Westpac now intends to slug credit card consumers by charging interest on fees and interest.  Their explanation that they are only applying the ‘industry standard’ highlights how the sector has become a closed shop to competition. Instead of taking the opportunity to make it a competitive point of difference, Westpac simply decided to jump on the gravy train.

“This is what happens when the banks are given too much power and Kevin Rudd must stick his hand up and take responsibility. Since he became Prime Minister we have seen major consolidation of the banking sector which is why the banks know they can get away with this behaviour.  The Government’s bank switching policy has also proven to be a dead dog. It was only designed to get a headline and that’s the only thing it’s achieved.

“After suggesting that the Government will crack down on exit and entry fees, the Treasurer only announced a review by ASIC. The Government still has not responded to the review after it was released in April 2008. Once again, Kevin Rudd is all talk and no action.”

Mr Hartsuyker said consumers should shop around with other financial institutions in order to get a better deal.

“I encourage all Australians to look at the smaller banks and mutuals. Credit unions and building societies generally have a strong customer focus and they do offer competitive options. The only way to halt the market dominance is to take the market off them. Australians can make a statement by voting with their feet and taking their business elsewhere.  A strong banking sector is important to Australia but so is a competitive one. The Rudd Government has stood arm in arm with the big banks and Australians are paying the price.”

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