Savers dudded by banks on deposit rates, ACCC finds


Australians are missing out on earning more on their savings, the competition watchdog has found, as it lashed the banks for operating “complex” and “opaque” pricing systems on deposit accounts.

An inquiry conducted by the Australian Competition and Consumer Commission (ACCC) on retail savings rates has released its final report, recommending a suite of reforms designed to make it easier for savers to switch between banks and find the best offer.

In its report, the ACCC found little evidence of aggressive competition between the banks to offer better savings rates. Rather, banks were pricing their savings products to “take advantage of consumer inertia and other biases to reduce the overall cost of their deposit funding”.

With Australians banking over $1.4 trillion in savings accounts and term deposits, Treasurer Jim Chalmers tasked the ACCC in February with investigating how deposit rates were being set during the current high interest rate environment.

While the banks have passed on roughly three-quarters of the Reserve Bank’s rate hikes to their customers with savings accounts, variable mortgage rates have risen far quicker through the current tightening cycle.

The margins banks generate has drawn significant attention in recent weeks, as the big four retail lenders – NAB, ANZ, CBA and Westpac – have enjoyed a boom in profits.

However, profits are expected to cool in coming quarters as banks face increased competition on their home loan books and savings accounts, reducing margins.

The report showed banks’ pricing arrangements for savings accounts, particularly through the introductory and bonus interest rates that customers received, meant identical accounts were earning vastly different returns.

Barriers to switching between banks, including the challenge of comparing products, ultimately meant savers weren’t receiving the best possible offer, the ACCC found.

“While high headline interest rates may seem attractive to customers, they can come attached with conditions that are hard for customers to meet and keep track of,” ACCC chair Gina Cass-Gottlieb said.

In response, the report makes several recommendations to ensure consumers get the most out of their savings, including requiring banks to inform their customers when their interest rates change and prompt them to consider switching to a better rate.

Measures to enhance transparency were needed, the commission said, so that consumers found it easier to choose products that better met their needs.

The ACCC also recommended that the federal government consider implementing a bank portability regime, whereby customers can switch between banks far more easily.

“This would not only improve outcomes for Australian consumers but help drive competition between banks for retail deposits,” Ms Cass-Gottlieb said.

Responding to the inquiry’s report, Dr Chalmers said the ACCC’s recommendations would be examined by Treasury, with the government’s formal response to be released in 2024.

“We expect banks to treat their customers fairly when it comes to their savings accounts,” Dr Chalmers said.

“Increased interest on savings should be a silver lining from the higher mortgage rates Australians are now experiencing.”

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