The head of the corporate watchdog has blamed the “oligopoly” of the major lenders for an absence of tracker rate mortgages in the Australian home loan market.
ANZ is the only big four bank to have signalled a willingness to introduce trackers, which are pegged to a central bank's cash rate, while its three main rivals have said their sources of funding are not linked to the Reserve Bank cash rate.
"We're in a market that is, frankly, an oligopoly," ASIC chairman Greg Medcraft told a House of Representatives' standing committee on economics on Friday.
"One of the reasons I think we don't have them today is because we do have a lack of competition. Where you do have competitive markets, whether it be in Europe or Ireland or the UK, clearly you do have tracker mortgages."
Mr Medcraft said tracker loans would offer consumers the transparency and clarity of pricing that have made them popular in other countries, and suggested banks could simply adopt the same approach to retail products as they do to corporate.
"This is not a new concept. Corporate Australia has tracker loans called the bank bill rate," Mr Medcraft said.
"They came about back when I was a banker in the '80s because corporates did not want to simply accept whatever the banks said was the rate. They wanted a true benchmark."
Mr Medcraft said he understood the banks' reasons for basing pricing on standard variable rates, but suggested banks need to take account of consumer anger at what is widely seen as a regular failure to pass on RBA cuts in full or in a timely manner.
"As a former banker who has funded mortgages all over the world, sure it's very nice when you can charge the customer whatever you want - I get that," Mr Medcraft said.
"But I don't think that necessarily it gives them the benefit they think it does, because every time they don't pass on a rate decrease it creates an issue with their customers. They don't have the flexibility they think they do and it would take an issue away from the banks."
Mr Medcraft spent nearly 30 years in investment banking at Societe Generale, and prior to that was a chartered accountant with KPMG.