In an action not easily forgotten by borrowers and mortgage brokers who might’ve put their clients into Virgin Money home loans, this lender is yet to pass on the rate cut delivered by the Reserve Bank on February 18. What’s worse, the bank’s CEO isn’t budging on giving his customers the cut right now.
The Daily Telegraph reported the following on this surprise case of bank ‘stinginess’: “Virgin Money Australia – a subsidiary of the nation’s eighth-largest lender, Bank of Queensland – has publicly stated its rates ‘will remain unchanged’ despite the Reserve Bank of Australia’s 0.25 percentage point reduction last month. Virgin is the only lender holding out, drawing the ire of many customers – and the Treasurer, who has made his displeasure known to Bank of Queensland boss, Patrick Allaway.”
Allaway’s actions have drawn criticism from Treasurer Jim Chalmers, who says the bank’s customers should be looking for a new lender as social media pages show that this is a marketing nightmare, and it comes as BOQ’s share price has dived 9.16% over the past month.
And I doubt whether this story is bound to help its future share price.
The potential marketing nightmare isn’t helped when it’s pointed out that the bank passed on every rate hike but isn’t passing on the cut. As the Daily Telegraph’s John Rolfe and Tim McIntyre reported, “Virgin Money promptly slashed 0.35 per cent from the interest it gives savers using its Boost Saver Account; a 10 basis point greater drop than the RBA’s.”
An important point must be made that Virgin Money is not connected to Sir Richard Branson’s brand company nor the airline Virgin Australia. However, it does show the problems that can occur when someone sells their business with their name attached to it.
To date, the CEO of BOQ, who is responsible for Virgin Money’s rate decisions, hasn’t budged on his decision, however, this story covered by a range of media outlets and social media platforms could change all that.
