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The Customer Owned Banking Association (COBA) has called on the Financial System Inquiry (FSI) to address the “unfair advantages” enjoyed by the big four banks.
Following the appointment of ex-CBA boss David Murray as head of the FSI, COBA chief executive officer Louise Petschler said ensuring competition in the banking sector must be the focus of the inquiry.
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“We need a regulatory framework that genuinely promotes competition and consumer choice,” she said. “This is a fundamental issue”.
According to Ms Petschler, the four major banks currently enjoy an unfair advantage through an implicit government guarantee, something that she says must be addressed.
“The unfair funding cost advantage enjoyed by the big four banks, if left unchecked, will lead to greater concentration and more harm to competition, consumer choice and innovation,” she said.
COBA also outlined other areas the asssociation hopes will be examined by the FSI, including:
-the culture of regulators and its impact on competition, consumer choice and the diversity of business models;
-consumer perceptions of the banking system, including the problem of major banks posing as regional banks or non-banks by using sub-brands;
-more effective disclosure about ‘shadow banking’ institutions;
-the proposed Financial Stability Fund levy; and
-the high fixed costs of regulation that weigh most heavily on smaller players.
