Australia’s regional banks and AMP Limited have told the Productivity Commission (PC) it is time the Government fully considered the advantages it had handed the major banks via delivering the bank guarantee during the global financial crisis.
In a joint submission to the PC the regional banks and AMP called for substantial policy reform to better deliver a level failing field.
Reflecting the tone of the submission, ME Bank chief executive, Jamie McPhee said regulatory imbalances had allowed a small group of banks to dominate the Australian market.
“Reform is needed if we want to create a fairer banking system so smaller banks can compete. A more competitive banking system is about improving customer choice and promoting economic growth,” he said.
Included amongst the recommendations contained in the joint submission filed by AMP Bank, Bank of Queensland, Bendigo and Adelaide Bank, ME Bank and Suncorp was a call for mortgage aggregators and brokers owned by major banks to “publicly report on the proportion of loans they direct to their owners”.
“While we do not suggest that major banks should be banned from owning broker networks, we do believe that where this occurs it should be managed in an open and transparent way to ensure customers are able to make fully informed decisions,” the submission said.
Suncorp banking and wealth chief executive, David Carter said: “We believe there can be a balanced and fair framework allowing banks of all sizes to compete on a level playing field, while still meeting all sound, prudential principles. We would like to see more attention on macro-prudential rules to promote customer choice and competitive pricing, as opposed to maintaining the status quo – which is in effect similar to the ‘yellow flag’ being waved at the Grand Prix, where all drivers are then prohibited from overtaking one another.”
