Aust'n PM orders banks to face annual 'accountability' checks in Parliament

Australian Prime Minister Malcolm Turnbull speaks during a media conference announcing new anti-terrorism laws in Sydney, Australia, July 25, 2016. [Photo/Agencies]

CANBERRA - Australia's Prime Minister Malcolm Turnbull has ordered the bosses of the nation's biggest banks to front Parliament once a year, in an attempt to keep them accountable.

Following a decision by many of the major banks to not pass on the full interest rate cut determined by the Reserve Bank of Australia on Tuesday, Turnbull reacted to the backlash by ordering the "health check", in which the banks would appear before the House of Representatives economics committee to explain their rationale.

The Opposition has bashed the move as "weak"; they would like a royal commission into the banking sector, something Opposition Leader Bill Shorten has long been a proponent of, however Turnbull said accountability would come once the banks face up to the Australian people.

"The banks should have passed on the full rate cut," Turnbull said in comments published in Friday's newspapers.

"There is no basis for them, no commercial basis for them other than to improve their profitability (in not passing on the cut)."

"They must provide a full account of why they have not done so. I tell you, that will drive some cultural change at the banks."

Australian borrowers were outraged when a decision was made by the banks to not pass on the Reserve Bank's full rate cut; it slashed interest rates by 25 points to a historical low of 1.50 percent, but Australians saw as little as 10 points passed on to them by the banks.

Opposition Leader Bill Shorten said a royal commission into the banking sector was long overdue.

"There is nothing Mr Turnbull won't do to protect the big banks from a royal commission," Shorten said following Turnbull's announcement.

"He's now inviting them to lunch in Canberra once a year so he can wag his finger at them. This is a friendly catch-up, not an investigation."