The impacts of interest rate hikes and stubborn inflation are being unevenly felt across the economy, the head of the Commonwealth Bank says, with many experiencing “extreme shocks”.
The bank’s chief executive Matt Comyn appeared before a parliamentary committee into the big four banks on Thursday.
While he said the broader economy was “fundamentally sound”, cost-of-living concerns were affecting the bank’s customers.
“The effect of monetary policy is unevenly felt across the country with different experiences for borrowers and depositors … households are spending more on essentials and are cutting back on discretionary spend,” he told the inquiry.
“Households and businesses have experienced extreme shocks in recent years: lockdowns, a demand surge, inflation and rapid interest rate rises. Many of our customers are finding it difficult to deal with the higher cost of living.”
The Commonwealth executive said it had made more than 130,000 hardship payment arrangements with its customers in the past year.
Young people were being disproportionately affected by cost-of-living pressures, with many having gone through their savings buffers, Mr Comyn said.
“Savings are being depleted, particularly by working families. Younger Australians, who tend to have lower incomes and smaller savings buffers are the most sensitive to these changes in prices,” he said.
“The pressure has continued to build over the course of this calendar year, we can see that very directly and sharply.”
Savings had depleted by 11 per cent for those between 25 and 34-years-old, the banking executive told the committee, which was double compared to other demographics.
The Commonwealth head also told the committee stronger penalties should be put in place for companies who don’t protect customers from scams.
While Mr Comyn said scam losses at the bank had been reduced by half in the past financial year, organisations such as the Commonwealth Bank should be required to pay back scam victims if protections aren’t enacted.
“There should be a proportionate liability scheme, which says to all of these organisations, including, of course, us, that if you do not meet your obligations, then you will be required to reimburse customer losses,” he said.
“This liability scheme should be simple, efficient and fair for customers with a single front door to access and resolve disputes across scams, fraud, cyber security and financial crime prevention.”
The head of Westpac, Peter King, will also give evidence before the parliamentary committee later on Thursday, while ANZ and NAB bosses will front up on Friday.
Treasurer Jim Chalmers said increased transparency was essential for the country’s four largest banks, which make up 80 per cent of the market.
“There’s never been a more important time for banks to treat their customers fairly, and we believe that more transparency is better,” he told ABC Radio on Thursday.
“That’s why the banks have this opportunity … to set out how they are helping people who might be doing it tough after these recent interest rate rises from last year and before.”
