One Big Switch branded 'cynical' and 'misleading'

by BN05 Nov 2012

A leading industry figurehead has come out to attack One Big Switch for what he calls a "cynical bank-bashing campaign" that risks misleading consumers about mortgage pricing.

John Kolenda, managing director of 1300HomeLoan, said One Big Switch's 'Truth in Banking' campaign was "futile and potentially misleading" when it claimed that banks were ripping off consumers if they were not passing on RBA cash rate cuts in full.

“This company is taking spin to a whole new level by pushing a 'Rate Gap Calculator' that implies the banks should fully pass on cuts to RBA cash rates even though the RBA Governor Glenn Stevens has repeatedly stated that is not the case due to their cost of funds,” Kolenda said.

“This may be good for generating publicity for One Big Switch but the truth is that no one can lend money at the rates implied by this calculator."

Kolenda added that unsuspecting borrowers would potentially think they can save more than what is currently available in the market and were "being burdened with a needless sense of grievance".

Kolenda said that everyone with an understanding of the industry knew bank lending rates were based upon the overall cost of funds, with the official cash rate being only one small component.

“There is no way any lender could lend money at the rates One Big Switch is suggesting because the price they pay for money from overseas and through term deposits has not fallen in line with the official cash rate."

Recently,comparison website RateCity also suggested borrowers had been 'charged' an extra $18bn by banks not passing on cash rate cuts. However, the website acknowledged that higher funding costs since the financial crisis were to blame for the rate cut gap.


  • by Country Broker 5/11/2012 10:26:42 AM

    CHOICE have been silent for a long time now ABOUT THEIR INVOLVMENT in the early days of "one big switch" , it cost them a member and probabbly plenty of others as well. Most of all it cost them credibility!

  • by Bernie Rose 5/11/2012 10:28:14 AM

    We all know that the banks act for themselves and not the client. Some of them do not have very good ethics when it comes to dealing with their customers. They are concerned with the almighty dollar instead of giving clients a fair go.

  • by John Black 5/11/2012 11:15:42 AM

    If you agree with John Kolenda's summation of the increased funding costs of the banks one could draw the conclusion that there is no correlation between lending margins and the record profits announced recently by the banks.

    Trying to support the current margins may have credibility if profits were less or past results maintained, but new record levels of profits.

    I wonder if John uses the same argument regarding broker commissions current versus pre GFC levels.

    Fair go John not sure your argument stacks!