The Finance Brokers Association of Australia (FBAA) has welcomed the Federal Government’s announcement of an inquiry by the competition watchdog into the refusal by banks to pass on interest rate cuts in full to customers.

FBAA managing director Peter White said asking the Australian Competition and Consumer Commission (ACCC) to examine the entire banking sector was “appropriate”.

“Considering the fallout from the Royal Commission, it’s time for all banks – not just the big four – to be far more transparent and accountable,” Mr White said.

“I’ve been calling on the banks for a long time to pass on interest rate cuts in full, and of course the latest was just two weeks ago.”

Since January, the Reserve Bank has reduced the official rate three times to a new record low of 0.75 per cent.

“The banks have been playing some sort of seesaw game where they will pass on a little bit this time and then a bit more – or a bit less – the next time,” Mr White said.

“There’s a pattern of behaviour here that Australians are clearly not happy with.”

He also rejected claims by the banking sector that the interest rate cuts were not being passed on in full because of increasing costs.

“That’s not right because the banks are being hit with penalties for breaches uncovered through the Royal Commission, and through investigations by the Banking Executive Accountability Regime (BEAR).

“Trying to balance the books by passing on these penalties is not something that should be borne by borrowers.

“You would think given the commentary and the whole focus around the banking sector, that they would be doing their utmost to regain trust with the public.

“This inquiry provides an opportunity for banks to be transparent around their decision making and how they balance the needs of the community,” he said.

The ACCC will deliver a preliminary report by March 30 next year with the final report due six months later.