Mortgage rate price signalling legislation introduced

The Federal Government has introduced legislation to Parliament to prevent price signalling between banks regarding mortgage rate increases.

Deputy Prime Minister and Treasurer, Wayne Swan (pictured), said that the Australian Competition and Consumer Commission (ACCC) had advised the Government of strong evidence that banks have been signalling increases in mortgage rates to their competitors. He said this behaviour undermined competition and pushed interest rates higher.

“Obviously the big banks won’t welcome tougher regulation, but we’re going to give the ACCC the powers it needs to protect the interests of Australian consumers,” Swan stated.

The reform is part of the Competitive and Sustainable Banking System package, which includes credit card reform. Swan said legislation regarding credit cards was also introduced to Parliament yesterday, and the key reforms require that credit card take the following steps: allocate repayments to higher interest debts first; refrain from charging over-limit fees unless consumers specifically agree that their account can go over the limit; implement a ban on unsolicited ‘tick a box’ credit offers unless the consumer has agreed to receive them; and tell consumers the implications of only making minimum repayments to their credit card accounts.