Banks 'should not move funds from term deposits to low-interest bank accounts'

Mozo

Friday 16 September 2011

Financial institutions have been criticised for moving funds from term deposits into bank accounts with lower interest rates once they have expired.

Movement of funds from expired term deposits criticised

Seniors Australia asserted that this practice is particularly damaging to vulnerable older members of society who rely on the funds from their savings accounts to live, reports the Australian Associated Press.

Steven Munchenberg, chief executive of the Australian Bankers' Association, told the news provider that new regulations were not necessary and that most banks inform customers that their term deposits are ready to expire.

Michael O'Neil, his counterpart at Seniors Australia, asserted that "action is now overdue", adding: "People under income pressure need to maximise the returns on their investments."

The news may inspire those with funds in term deposits that are about to expire to consider whether they will move their funds into a high interest savings account or whether they will let it rollover.

Earlier this week, banking analyst at Nomura Victor German told the Herald Sun that enthusiastic saving among Aussies could help avoid the need for banks to increase lending rates.

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