Thursday, December 10, 2009

Westpac digs deeper


Opposition leader Tony Abbott has opened up the prospect of reregulating the banks in response to Westpac's outsized rate increase saying Kevin Rudd gave Westpac "enormous support" during the financial crisis without getting influence in return.

The attack and threat of regulation came as Westpac emailed tens of thousands of customers a link to an animated video that compared mortgages to bananas and released a consumer confidence survey showing its own rate rise was hurting.

Mr Abbott said that under John Howard as Prime Minister and Peter Costello as Treasurer, "if the Reserve Bank put interest rates up or down the banks put interest rates up or down by the same amount".

Raising the prospect of regulation he said "Now, the government has given a lot of support to the banks, quite understandably in the throes of the global financial crisis, but why hasn’t got any leverage over them?"...

During the financial crisis the government allowed guaranteed deposits with banks, guaranteed bank borrowing and allowed Westpac to take over St George.

Regulation of mortgage interest rates was abolished during the Hawke/Keating government of the 1980s in response to a recommendation of the Campbell committee of inquiry into Australia's financial system.

While stopping short of threats of regulation or payback Mr Rudd invited Westpac to "have a long hard look at itself" after emailing a video link to customers comparing its 0.45 point rate hike to an increase in the price of bananas.

Accompanied by images of storms lashing banana trees and a Westpac branch the voiceover says 'in some ways a bank is really just like a company that sells banana smoothies."

The video was yesterday removed from the Westpac website and replaced with a notice saying the page "no longer exists".

"[Westpac is] talking about peoples' most basic things in life - a mortgage, an affordable mortgage, to underpin things as basic as a home," Mr Rudd told told Townsville radio.

"Customers out there should be looking at where else they can do their banking."

Further information emerged yesterday about the low take-up of the government's bank switching package with the Australian Securities and Investment Commission revealing that in the 18 months to July it had logged only 193 calls at its bank switching hotline.

The "hotline" uses the same phone number as the ASIC switchboard making it difficult to determine whether it is used at all. ASIC staff described the number of calls as "very low" relative to the total number ASIC receives.

Neither the Treasurer nor the Prime Minister have invited the public to make use of the hotline during the dispute with Westpac.

The Westpac-Melbourne Institute survey conducted during the week Westpac announced its near doubling of the Reserve Bank's 0.25 per cent rate hike shows that while overall consumer confidence dropped 3.8 per cent in December, confidence amongst mortgage holders dived 8.9 per cent.

The proportion of Australians believing that now was "a good time to buy a dwelling" slid 12.3 per cent.

Asked to recall the events that had dominated the news during the week in which the Coalition switched leaders and Westpac produced a near double interest rate increase only 6 per cent nominated political events. More than 40 per cent nominated interest rates.

Switching banks is as easy as...

1. Comparing mortgage rates
2. Proving your identity all over again
3. Proving your partner's identity
4. Providing bank statements showing savings habits
5. Providing payslips or group certificates
6. Providing evidence of superannuation, child support
7. Obtaining a new home valuation
8. Paying any exit fee *
9. Paying any set-up fee
10. Switching over direct payments and debits *

* things the Rudd/Swan bank switching package actually helps with

Published in today's SMH  and Age 

Westpac's Bananas video now:

Westpac Melbourne Institute Consumer Sentiment Report, December

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. Westpac's gutsy, greedy, ineptly-handled cash grab