Australia's major banks will soon be required to report to the Federal Parliament's Economics Committee in an effort to keep the sector accountable, the Prime Minister has announced.
Malcolm Turnbull told reporters in Sydney that representatives would be required to explain issues such as interest rate policies.
The announcement comes after major banks failed to pass on the Reserve Bank's interest rate cut in full.
Mr Turnbull said requiring banks to justify their actions in person to politicians would "drive some cultural change".
"What this will do is create a regular and permanent method of accountability and transparency for the banks," he said.
"This is an important step, a permanent step, a permanent change in the regular financial calendar that will require the banks to become accountable."
Mr Turnbull said it would be more effective than a royal commission into the banking sector, something the Federal Opposition has been pushing for.
Shadow Finance Minister Jim Chalmers responded to the announcement on social media, labelling the Prime Minister as "weakness personified".
Treasurer Scott Morrison made the announcement alongside the Prime Minister, saying that he had already spoken with the major banks and they had agreed to take part in the process.
Mr Morrison said that the committee would be able to call "whoever they believe appropriate" for both public and private hearings.
Shorten, Plibersek label solution 'weak'
Deputy Labor Leader Tanya Plibersek told reporters it was a "weak measure from a weak prime minister".
"Malcolm Turnbull wags his finger at the banks and the banks do what they always do," she said.
Opposition Leader Bill Shorten echoed Ms Plibersek's response on Twitter, calling Mr Turnbull's solution "weak and pathetic", and adding that "only a royal commission will do".