‘It’s up to you to get better deal,’ says ACCC chief on interest rates

Rod Sims has ruled out forcing banks to change the interest rates they offer to new versus existing borrowers for their mortgages.

ACCC Chairman Rod Sims has said staying with one entity and not inquiring about better rates could lead to paying more. Picture: AAP

ACCC chief Rod Sims has ruled out forcing banks to change the interest rates they offer to new versus existing borrowers for their mortgages as part of its inquiry into home loan pricing.

The big four banks have been criticised for charging a loyalty tax on longstanding mortgage customers when they offer lower ­introductory rates to attract new customers.

“We are not saying in any way it is illegal, we are not in any way saying it is unethical,” Mr Sims said of the current structure of bank mortgage pricing. “We are the consumer regulator. We are just saying to consumers, be aware that if you stay with one entity, be it banking, be it energy, over time and you’re not inquiring about better rates”, you could end up paying more.

The news should come as a relief to a banking sector under pressure to explain its mortgage pricing to borrowers as the RBA cash rate has continued to drop.

The Australian Competition and Consumer Commission is investigating a range of issues as part of its inquiry into mortgage pricing, including how the cost of financing impacts banks’ decisions on rates and why Reserve Bank cuts are not passed on in full.

In the electricity market, there has been heavy intervention in the market, but Mr Sims says bank mortgage pricing is a different matter. Electricity marketing, he says, has been done through discounts to a standard offer, an offer that changed with every supplier.

“We could show you where a 45 per cent discount was a worse deal than zero discount, so it was completely confusing.

“The electricity industry let that get out of hand. I have a lot of evidence that they think so too. They were getting warned.”

Mr Sims says the situation in the electricity market was not true of banking. “No. This was people paying double. With banking, we are saying to customers look, you might save a few basis points if you ring them up and say I’m thinking of moving. My job to help consumers is to say there might be a couple of thousand dollars in a phone call, go for it.”

Mr Sims made the comments as part of a wide-ranging interview for The Australian.