Last year, the banking industry set out to break the nexus between movements in the Reserve Bank's cash rate and changes to their variable home and business loan rates.The banks argued, with complete justification, that the cash rate was only one element in the funding mix and that their rates must also reflect movements in the cost of term wholesale funding, securitisation and other capital markets' issuance. This development was given its clearest expression by ANZ, which established a formal monthly interest rate review. In December, the bank announced that on the second Friday of each month it would release the results of its review and any changes to retail mortgage and small business lending rates.In a statement issued following the January review, ANZ chief executive Australia, Phil Chronican, said: "By reviewing key variable lending rates each month we can more accurately reflect the sustained changes in funding costs we incur through the interest we pay to customers and to investors in wholesale money markets."Chronican said the bank wanted the process of setting rates to be transparent and he saw the monthly rate review as a contribution to an "informed debate" about bank funding. Basically, what was on offer was a deal with the customer; the bank was asserting its right to price its loans appropriately, given the overall funding picture, and it would make an effort to explain its funding structure and the price movements of the various components.Other banks supported what ANZ was doing and Australian Bankers' Association chief executive Steven Munchenberg got on the conference circuit to help argue the case for a change in the way banks price their loans.Almost a year down the track, the banks have succeeded in breaking that nexus, but they have failed to be transparent or to contribute to informed debate.After the Reserve Bank cut the cash rate by 50 basis points in May, mortgage lenders passed on an average of 35 basis points. After the RBA cut the cash rate 25 basis points in June, lenders passed on an average of 20 basis points. And, after the 25 basis point cut last month, lenders again passed on an average of 20 basis points.Were these pricing changes explained to customers? After going to some trouble initially, ANZ pretty much gave up on communicating with customers. The statement it issued in October, when it announced that it would cut its standard variable mortgage rate by 20 basis points, said: "Recent stability in wholesale funding markets has been offset by the impact of intense competition for retail deposits as banks seek to improve their funding mix in response to market and regulatory pressures. While this increase in competition is benefiting the majority of our customers through historically high deposit rates relative to the cash rate, last week's decision from the RBA has provided some scope to once again reduce our variable lending rates."That is the entire reference to funding costs and it cannot be described as either transparent or informative.The ABA's information campaign