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Australian consumer watchdog to probe banks for "voodoo" interest rate rises: treasurer

Xinhua, May 17, 2017 Adjust font size:

The Australian government will probe the nation's big banks to uncover the reasoning behind random and unprecedented mortgage interest rate rises, with the Australian Competition and Consumer Commission (ACCC) set to investigate whether or not the reasoning behind the hikes passes a sniff test'.

Following this month's government budget announcement in which lawmakers announced a 6.2 billion AU dollar (4.61 billion U.S. dollar) levy for the big banks to help bring the budget back to surplus, Treasurer Scott Morrison has sent a further warning to the banks in announcing the mortgage rate crackdown on Wednesday.

Speaking to News Corp, Morrison said the banks had a "stranglehold" over the everyday Australian, saying that the ACCC will keep the banks accountable for at least the next 12 months by asking them to explain every rate rise.

"Interest rates have been low for some time and banks have actually increased their mortgage rates," Morrison said. "The banks should explain it and more importantly they should be honest about it."

"It's no good saying this is what's popped out of our voodoo black-box and it's terribly complicated and you won't understand it, so you have to pay more."

Currently, Australia's Reserve Bank (RBA) has the nation's official cash rate set at a record low level of 1.5 percent, but a number of the nation's major banks have set their home loan rates as high as 5 percent.

In addition, Morrison said the banks were continuing to adjust their lending rates against the advice of the RBA, 18 times at a greater cost to their customers since the turn of the century.

"That's what I'd call a trend," Morrison told News Corp.

"We're putting together a standing squad if you like within the ACCC, the competition regular, to police competition between the banks in the banking sector."

Morrison added that the government was considering approving further bank licenses in an attempt to encourage competition in the banking sector considering the "big four banks" had a current market share of 82 percent of all customers. Endit