Under instruction from the government, the ACCC has launched an inquiry into whether banks have been short-changing their deposit holders.

As the cash rate has increased from 0.1% in April 2022 to the current 3.35%, most banks have fully passed on these rate increases to their home loan interest rates.

However, rises in rates for deposit products have often been smaller and more inconsistent.

Gina Cass-Gottlieb, chair of the ACCC, said the regulatory body would use the inquiry to make sure Australians are getting appropriate returns on their savings.

"We welcome this direction from the Government to shine a light on the retail deposit market and rate-setting decisions of banks,” Ms Cass-Gottlieb said.

“We are aware that deposit and savings accounts are an important source of income for many Australians, typically supplementing their income from employment, superannuation and the pension.”

Australians currently hold over $1.3 trillion in savings and deposit accounts.

RBA data demonstrates the extent the discrepancy between home loan rates and deposit rates has risen.

In April 2022, the average new variable rate owner occupied home loan was 2.41% p.a, while online savings accounts sat at an average of 0.05% p.a, a 236 basis point difference.

By December, these rates were 4.98% p.a and 1.05% p.a, a gulf of 393 basis points.

The RBA cash rate was last this high in mid-2012.

In October 2012, as the cash rate sat at 3.25% p.a, the average online saving account yielded a 3.30% p.a interest rate.

In January 2023, where the cash rate was at 3.10%, online savings accounts returned just 1.1%.

The news comes in the same week Commonwealth Bank announced record half year profits, which CEO Matt Comyn said was at least partially due to increased rates.

"Higher interim cash profits were a result of volume growth and the recovery in our margins as cash rates rise from historic lows," Mr Comyn said.

He has responded to the ACCC announcement by defending CBA's 'very competitive' deposit account rates and said that the bank would assist the inquiry with any information they needed.

Bonus rates a further contention

The ACCC will also be questioning whether the increases to deposit products that have happened have been disproportionately applied to bonus or introductory accounts.

'Bonus' savings accounts typically have additional conditions consumers need to meet in order to earn higher rates.

Minimum deposit sizes and the inability to withdraw funds for a certain period of time are common examples.

The accusation is that the banks are only fully applying rate rises to attract new customers, or to the conditional products that are more beneficial for their funding.

Scope of the inquiry

In the project overview, the ACCC set out the matters that the inquiry will investigate into. These include the following:

  • Interest rates on deposits and retail deposit products
  • The terms and conditions on retail deposit products. This includes the decision making process of the banks when they adjust their products to respond to changes to the cash rate. Ms Cass-Gottlieb said that the ACCC would be reviewing which " barriers are stopping consumers from seeking a better return on their savings."
  • The extent price competition applies among retail deposit products
  • How retail deposit products are used to fund the banks commercial activities.

The ACCC will be expected to make a report to the Treasury by 1 December.

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