Reserve Bank should require transparency

Reserve Bank should require transparency on bank funding costs

Bank workers’ union Finsec is calling on the Reserve Bank to provide the same analysis on banks’ funding costs that the Australian Reserve Bank recently undertook, in light of today’s announcement of the increase to the Official Cash Rate.

“With interest rates set to rise it is critical that increases are fair and customers are not paying more than they have to,” said Finsec Campaigns Director Andrew Campbell.

“A recent Australian Reserve Bank report, and subsequent analysis by the Sydney Morning Herald, armed Australians with crucial information about what their banks' actual funding costs were. New Zealanders do not currently have access to the same information,” said Campbell.

“Alan Bollard has said the cost of banks’ wholesale funding is a factor in the economy at the moment, yet the public has virtually no information on the actual costs of that funding and therefore what appropriate interest rates should be,” said Campbell.

“New Zealanders should be able to access the same data as Australian customers can. Better information about real funding costs is important for the proper functioning of the market.”

“Banks are considering today whether to raise mortgage interest rates on the back of this OCR rise. They do so with a full range of information that customers and regulators never see and are therefore not able to fully assess these decisions,” said Campbell.

Finsec will be writing to the Reserve Bank asking them to conduct regular public analysis on banks’ funding costs and what proportion of borrowers’ payments are due to actual increases in banks funding costs, and what proportion are funding bank profits.

ENDS

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