The Government would be better off having a Royal Commission into the banks than relying on another Productivity Commission (PC) inquiry, according to the Federal Opposition leader, Bill Shorten.
Just hours after the Government moved to place vertical integration in the financial services industry under the microscope via a new inquiry reference to the PC, Shorten described it as a joke and said only a Royal Commission could succeed in stopping “bank rip-offs”.
The PC inquiry reference was announced by the Federal Treasurer, Scott Morrison, on Monday just 24 hours before the Federal Budget with the Treasurer saying he had told the PC to hold an inquiry into competition in Australia’s financial system consistent with the Government’s response to the Financial System Inquiry (FSI).
Importantly the PC inquiry will come at a time when many of the banks’ half-year reports to the Australian Securities Exchange (ASX) point to ongoing challenges within their wealth divisions with mounting regulatory costs undermining advice revenues.
The Government announcement was welcomed by the Australian Bankers Association (ABA) which said it was pleasing the inquiry would look at all parts of the financial services industry.
Morrison said the PC would look at how to improve consumer outcomes, the productivity and international competitiveness of the financial system and economy more broadly, and support financial system innovation, while balancing financial stability objectives.
The Treasurer said that, in doing so, the PC would consider the level of contestability and concentration in key segments of the financial system, including the degree of vertical and horizontal integration.
It will also examine competition in the provision of personal deposit accounts and mortgages and services and finance to small and medium businesses.
The Inquiry will commence on 1 July 2017 and is due to report to the Government by 1 July 2018.
