Regulatory framework squeezing out new players: Coles
Coles says the foray of new players into the heavily-concentrated financial services sector hinges on the watering down of one of the regulator's key barriers to entry.
In a submission to the Financial System Inquiry (FSI), the retail giant said the market was currently dominated by big banks, largely as an intended consequence of a regulatory system that favours existing institutions.
"Based on Coles' recent experience in attempting to enter the market and expand our financial services, we would agree with the Inquiry's observation that "Australia's larger banks have a number of commercial competitive advantages over their smaller domestic rivals, including scale of operations, funding costs, product breadth and brand recognition"," it said.
The supermarket also called for the fast-tracked removal of the Specialist Credit Card Institution (SCCI) framework, which it said significantly inhibits competition.
The Australian Prudential Regulatory Authority (APRA)-managed framework currently requires credit card issuers or acquirers to have an Authorised Deposit-taking Institution (ADI) licence or an SCCI.
Opening the credit card market to additional new entrants, with lower barriers to entry, should promote greater competition in the credit card market, while still ensuring that participants meet adequate eligibility criteria," it said in its submission.
"In turn, increased competition from non-traditional players will inevitably increase the differentiated product offerings in market, creating increased consumer choice."
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