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ISCOVER
Staff Reporter
Australia’s non-major and non-bank lenders will never be able to truly compete with the big four unless changes are made to the financial system, a new report by Deloitte has claimed.
According to the Competition in Banking report, the post GFC environment has left the major banks “too big to fail”, handing them an unfair competitive advantage and weakening the competitiveness of Australia’s banking system.
The report, commissioned by the customer owned banking sector, found the GFC swung the pendulum towards stability and away from competition.
It argues this has left Australian consumers worse off and smaller banking institutions unable to compete as strongly as they were before the crisis.
“Australia hasn’t reviewed its financial system since the Wallis inquiry of 1997 and the findings of this report make it clear it’s now time to have an in-depth inquiry to improve competition and get a better deal for consumers,” chief executive of mutual banking industry body Abacus, Louise Petschler said.
“Deloitte Access Economics has shown that cheaper funding costs for major banks and more regulatory burden on smaller players has led to less competition. Without sensible review and action, this will lead to less choice and worse outcomes for Australian consumers in the future.”
“An extensive and independent inquiry would be a positive step to improve banking completion and better protect the financial system for all Australians from future global economic uncertainty.”
Ms Petschler said Australia has the luxury of a banking sector that is strong and stable, putting the country in the perfect position to review its framework and ensure that its banking sector remains strong and competitive for the decades ahead.
The report also found that smaller institutions are now unable to compete as effectively due to increased funding costs and more costly regulation.
