Andrew Thorburn, CEO of National Australia Bank (NAB), insists the bank lifted interest-only mortgage rates to meet new regulatory requirements, not to pass on the cost of the federal government’s $6.2bn bank levy.
The Australian Competition and Consumer Commission (ACCC) is monitoring the big banks to ensure they don’t unfairly pass on the cost of the levy to home loan borrowers.
Thorburn told MPs last Friday that the NAB’s rate hikes were largely a response to the Australian Prudential Regulation Authority’s (APRA) limit on new interest-only lending.
Towards the end of March, APRA told the banks to limit interest-only lending to 30% of new mortgages in an effort to address the growing risks caused by high household debt.
“If we wanted to maximise profits, we would not have reduced principal-and-interest rates,” Thorburn told MPs in Canberra.
Antony Cahill, COO at NAB, told the House of Representatives’ standing committee on economics that NAB’s sole focus in moving rates was to meet APRA’s 30% limit. He amended this to a “key focus” under questioning by Liberal MP David Coleman, who agreed that Cahill had accidentally misspoken.
Thorburn acknowledged that NAB financial planners had falsely witnessed customer documents, but the committee accepted an internal review’s findings that this was done to speed up applications rather than procure financial gain.
Liberal MP Julia Banks said the fact that 343 staff had owned up to the policy breach made it obvious there was a “culture of sloppiness” in the bank, which began at the top.
“A review states that staff have clearly not had a financial benefit from doing this,” Thorburn said. “Having said that, [the policy breaches are] serious.”