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.