Rate cut highlights banks’ desire to lift their image
The reaction by the major banks to the two official interest rate cuts we've now seen in 2001 highlights a change in attitude that now sees them increasingly responding to growing public criticism, according to consumer information provider InfoChoice.com.au.
InfoChoice chief executive Chris Gosselin said: “While greater competition has meant the major banks are less able to dictate terms to consumers and rest of the banking industry it now seems there is also a clear move to counter the negative public image emerging in recent years over issues such as fees, branch closures and the ‘cash-for-comment' controversy.
Among the leading banks, Westpac appears the most proactive in this regard responding with immediate announcements following both official rate cuts of across-the-board cuts to variable-rate home, personal and business loans and credit cards.
Again, the bank is passing on the full official cut (0.25 percentage points in this case) to loan rates and has said that the corresponding reduction in deposit rates will average 0.20 percentage points.
The Westpac cut will take effect in seven days. Other banks and non-bank home lenders are also expected to announce cuts today and tomorrow and to pass them on within a similar timeframe.
InfoChoice's monitoring of banking over the last eight years shows this is a far cry from the mid-1990s where the delay in passing on a rate cut was up to 54 days. Rate rises have always flowed through to consumers much faster.
The pressure ANZ Bank found itself under after initially limiting last month's cut to its standard variable home loan rate underlines the intense scrutiny banks are now under.
“After a disastrous public relations run where everyone from the prime minister down was expressing disapproval, it is refreshing to see the banks responding positively to consumer, media and political pressure,” Mr Gosselin said.
Westpac has also been the most conciliatory towards the Australian Competition and Consumer Commission in its attack on card interchange fees in which it is alleged the major banks are reaping unjustified fee revenue from credit card and ATM transactions.
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