Bill's Media Releases

LABOR CALLS FOR INQUIRY INTO DISPROPORTIONATELY HIGH CREDIT CARD INTEREST RATES AND FEES

Labor will move to establish a Senate inquiry into the growing gap between high credit card interest rates and underlying RBA cash rate.

 

It's simply unfair that banks and financial institutions are happy to jack up rates when the cash rate rises but aren't so keen to drop it falls.

 

Increases are passed through to consumers more quickly and to a greater extent, while reductions are passed through at lower rates, and more slowly.

 

There is indisputable evidence that families and small businesses are being dudded.

 

Labor is concerned that in addition to cost of living pressures and cuts of $6000 as a result of the Abbott Government's Budget, families are being hit with disproportionately high credit card interest rates and fees.

 

Hundreds of thousands of small businesses are also affected, with many sole traders in particular relying credit cards to keep cash flow operating.

 

The Government’s top economic advisors including Treasury Secretary John Fraser, RBA Deputy Governor Malcolm Edey, APRA Chairman Wayne Byres and ASIC Deputy Chair Peter Kell have stated that this growing gap is an issue that needs to be investigated.

 

Treasury Secretary John Fraser:

 

My personal view is that it is an issue, well worth further, deep, investigation and consideration. I’m driven partly by the fact that it does seem that the people who pay these credit card interest rates, those who don’t fully pay off their amounts, tend to be people, perhaps less capable of servicing that debt - and that worries me.

 

1 JUNE 2015

 

Deputy Governor of the RBA Dr Malcolm Edey:

 

Senator Sam Dastyari:And you believe Dr Edey it’s a good idea for us to have a proper investigation of what’s gone on with credit card rates and the gap between that and the cash rate?

 

Dr Malcolm Edey:Yeah I think it’s a good question and it should be looked at.

 

1 JUNE 2015

ASIC Deputy Chair Peter Kell: 

 

We’ve seen what Treasury and others have said, and we would be very much prepared to work with Treasury to look at this issue because it is obviously something of community concern. … they remain very sticky despite interest rates coming down in other sectors, so as to the reasons why that’s occurring I think it would be worth a close examination.

 

Wednesday 3 June 2015

 

APRA Chairman Wayne Byres:

 

I understand the point fully that the margins on credit card business look very high certainly to any other form of credit, and certainly I can’t sit here today with an explanation of why that is. So, to that extent, informing us all about that is probably a useful piece of work.

 

Wednesday 3 June 2015

 

It seems they are being ignored once again by Tony Abbott.

 

Tony Abbott just doesn't get the issues families are facing.

 

It’s time we got to the bottom of this and I have written to the Prime Minister asking for his support in establishing this inquiry.

 

It's up to the Prime Minister if he wants to work with Labor or ignore issues like this that are affecting families and small business.

 

We need answers from the banks and financial institutions - these are answers Australian families deserve.

 

 
Reserve Bank of Australia - Review of Card Payments Regulation, Issues Paper, March 2015

 

Proposed Senate Economics References Committee inquiry  – Terms of Reference

That the following matter be referred to the Economics References Committee for inquiry and report by 24 November 2015:

The economic effect of the difference between cash rates and credit card interest rates, with particular reference to:

(a)           the Reserve Bank of Australia’s cash rate announcement and associated changes in credit card interest rates;

(b)          the costs to banks, credit providers, and payments systems, including those related to:

(i)        borrowings,

(ii)      credit risk and default rates and credit risk pricing,

(iii)     the various credit card loyalty programs,

(iv)    consumer protection measures, including reforms introduced following the Global Consumer Crisis,

(c)           transaction costs, including interchange fees, on the payments industry;

(d)          the costs to consumers, including those related to:

(i)        how and when interest is applied,

(ii)      minimum monthly payment levels,

(iii)     the various credit card loyalty programs of others users;

(e)          what impact competition and price signals have on the credit card market;

(f)            how the enforcement of responsible lending laws and the national consumer credit regime effect consumer costs;

(g)           how consumer choice of credit card products can be improved, with reference to practices in other jurisdictions; and

(h)          any other matters.

 

 

SUNDAY, 21 JUNE 2015

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