Australia's parliament to grill bank CEOs on customer treatment

Increased scrutiny over oligarchic dominance of financial industry
||Last Updated: 09/20/2016
Commonwealth Bank CEO Ian Narev at the company's headquarters in Sydney, Australia in February. REUTERS/David Gray

SYDNEY (Reuters) - The chief executives of Australia's four biggest banks will be questioned on their treatment of customers before a parliamentary committee next month amid increased scrutiny over their oligarchic dominance of the nation's financial industry.

A spokeswoman for Commonwealth Bank of Australia said chief executive Ian Narev was scheduled to appear between Oct. 4 and Oct. 6, the dates set aside for the testimony from the bosses. A spokesman for Australia and New Zealand Banking Group said chief executive Shayne Elliott had been scheduled provisionally to appear on Oct. 5.

Representatives of National Australia Bank and Westpac Banking Corp could not be reached for immediate comment.

The bank chief executives' testimony will become a regular ritual after Prime Minister Malcolm Turnbull and Treasurer Scott Morrison last month announced the bank bosses would have to face a parliamentary committee at least once a year.

The new requirement followed the failure of the four banks to fully pass on to mortgage customers an August cash rate cut by the Reserve Bank of Australia to a record low of 1.5 per cent, sparking political and public criticism.

The committee will require the banking bosses to explain the cost of funds, impact on margins and the basis for interest rate pricing decisions, although the forum could easily move into issues of banking scandals and market power.

"The reality is the members of the committee can ask whatever they like on whatever they like," Australian Bankers' Association chief executive Steven Munchenberg told Reuters in a phone interview of the potential line of questioning.

He said the banks had not passed on the full interest rate cuts in part because they had raised interest rates on term deposits to attract more funding as regulatory requirements for capital increased.

The government on Aug. 31 defeated a motion for a sweeping investigation in the banking industry in favour of a limited inquiry into bank misconduct in the small business sector.

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