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Confidence in the financial system “could be eroded even further” if the major banks are not “overtly transparent” about their sub-brands.
P&N Bank has told the Financial System Inquiry that sub-brands need to “openly disclose that they are a division of their parent bank” and not hide ownership details in the fine print.
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“Australians have a low level of knowledge about the true ownership arrangements of smaller competitors such as Aussie Home Loans, Bank of Melbourne, BankSA, Bankwest, RAMS, St George and UBank,” the bank’s submission said.
P&N said clearer disclosure would deliver more empowered consumers, more accountability and greater transparency.
It also warned that “trust in an open and competitive financial system could be eroded even further” if the issue is not given serious priority.
P&N said it recognised the importance of the major banks to the health of Australia’s financial system and the need for them to compete effectively on the global stage.
However, it claimed the current regulatory framework does not deliver a level playing field for regional and customer-owned banks.
The Customer Owned Banking Association told the federal government’s Competition Policy Review earlier this year that some majors “hide behind sub-brands”.
[Related: P&N Bank cuts fixed rates by 31 points]
