The banks are urging customers to take on deeper debt loads whether they can afford the repayments or not, a new study by the Australia Institute claims.

The study, entitled “The Money and Power: The Case for Better Regulation in Banking,” says that many people are receiving new credit card and personal loan offers or being pushed to accept higher credit limits, including the unemployed and lower-income households.

Josh Fear, deputy director of the Australia Institute, accuses the banks of having a stranglehold on Australian businesses and households, and being obsessed with ever-higher profits rather than responsibility. Before-tax profits for the major banks are roughly $35 billion annually, he states, with $20 billion of that comprising so-called “superprofits.”

The report included a survey of 1,360 adults. Half of the respondents had received an unsolicited offer to raise their credit limit in the last twelve months. Two-thirds were offerred a new credit card and one-third received the offer of a personal loan.

The four major banks, the report stated, are “relatively free to gouge as much money from the Australian economy as they are able.”

Steven Munchenberg, head of the Australian Bankers Association, countered that banking customers were free to reject the credit card and personal loan offers received.

Federal lending regulations had already been revised, tightening requirements for lenders, and loan defaults weren’t due to banks’ marketing efforts but to family, health, or employment issues for the borrower, said Mr. Munchenberg.

Source: http://www.heraldsun.com.au