Media Release
19 January 2010
Rudd Government Should Make Banks Work Harder for Customers
Bank lending policies in the $60 billion unlisted property fund area, which have left tens of
thousands of self funded retirees with frozen funds or no returns because of excessive interest
rate charges and fees, should be part of the Rudd Government’s push for productivity.
Owen Lennie Spokesman for the Light of Day, a not for profit group formed to protect the interests of
investors in unlisted property trusts, said apart from wanting people to work harder in the future,
the Rudd Government should be looking at ensuring self funded retirees, who have already
worked hard to stay off the CentreLink pension and support themselves, are protected against
excessive bank interest rates and fee charges.
“The Prime Minister Mr Rudd should launch a Parliamentary Enquiry into whether these excessive
interest rate and fee charges in the unlisted property trust sector, at a time of record cash profits, are a
fair suck of the taxpayer’s sauce bottle following the Government’s Guarantee and the permissive
stance of the ACCC to mergers in the banking sector.”
“With one face the banks have been solemnly assuring customers and the Government that they are
forced to raise interest rates because of the cost of money and with the other face they immediately
announce and celebrate record cash profits.”
This is happening at a time when the major banks’ return on shareholder equity after tax (and after the
provisioning) is still as high as it has been for more than twenty-five years, according to the Reserve
Bank of Australia Stability Review in September 2009.
“At the heart of the current crisis is the action of some banks to take advantage of the downturn
where the valuation of a property has reduced to force the unlisted property fund into a higher
rate of interest or to roll over their loan for short periods, incurring excessive fees.
Mr Lennie said in one case we are aware of, investors in a fund faced an interest rate cost increase of
50% overnight which caused the fund to cancel distributions and suspend major building maintenance
which would have increased rents and investment performance.
Media Enquiries:
Owen Lennie, Spokesperson, Light of Day Mobile: 0411 507 505
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