The Banking Amendment Bill 2010 - Australian Greens Introduces Laws to Control Bank Interest Rates

The Australia Greens Party has promulgated laws which have enforced restraints on the ability of the nation’s biggest banks to increase the interest rates on mortgages.

The Banking Amendment Bill 2010 introduced — which proposes four amendments to the Banking ACT 1959 (Cth)— will try to scrap “unfair” ATM fees, ensure bank accounts are free of fees, cap mortgage exit fees and introduce a mortgage product with variable rate so as to reduce the lenders’ costs of funds.

THE BILL IN DETAIL

The proposal of Australia Greens Party in the lower house of parliament would empower the Australian Prudential Regulatory Authority to prevent banks from raising the mortgage fees above the finance cost. Besides, banks should offer fee-free bank accounts and also cap exit fees charged on people transferring their mortgages to another lender, Greens Party member Adam Bandt said.

Following the moves of Australia & New Zealand Banking Group Ltd. and the Commonwealth Bank of Australia, Westpac Banking Corp. and National Australia Bank Ltd. announced that they would increase their standard variable home loan rates. All four banks raised their charges by more than the Nov. 2 quarter-percentage point move by the Reserve Bank of Australia, which, in turn, has triggered a backlash by the homeowners and severe criticism from lawmakers.

Besides, the Greens also wants to impose a 24-month freeze on the domestic banks, the so-called “Big Four” (Commonwealth Bank, Westpac, National Australia and ANZ Bank), from raising their interest rates over that of the Reserve Bank.

TOPIC OF DEBATE

It must be mentioned that mortgage rates have been a topic of public debate in Australia, where over 90 percent of the homeowners have variable rate of home loans. Australian Treasurer Wayne Swan said that the government was working on the changes in the banking industry, which would increase competition. This would allow the borrowers to leave their banks more easily and avail of a better deal with smaller lenders.

The Australian government will “soon” announce “a carefully considered, effective plan to promote more competition and give people a fair go,” Swan said. Besides, Australian Prime Minister Julia Gillard said that while the government -- relying on the support of three independent lawmakers and Greens Party – cannot regulate the nation’s interest rates, it will provide more powers to the competition regulator in a banking reform package that will be announced next month.

THE OPPOSITION STANCE

The opposition treasury spokesman Joe Hockey said that Tony Abbott’s Liberal-National coalition, which has the support of more voters than the minority Labor government according to a Newspoll on October 26, will introduce laws in parliament this month to empower the competition watchdog even more.

Greens Party leader Bob Brown said, “I put a direct challenge to Joe Hockey and to opposition leader Tony Abbott to support the Greens in preventing the banks from doing it again,” told the Nine Network.

 

http://www.bsl.org.au/pdfs/BSL_subm_Banking_Amendment_Bill_2010.pdf