PM: More to do to clean up the banks
PRIME Minister Malcolm Turnbull says there is more to be done to clean up the banking industry and ensure customers are put first.
As the royal commission continues to expose dodgy conduct in the banking sector, the Productivity Commission yesterday released its longawaited report into competition.
The report found the Australian banking sector was dominated by a handful of players. Four banks own more than 75 per cent of the market for loans, personal deposits and credit cards and four insurance giants have in excess of 80 per cent share of the market for lenders mortgage insurance and travel insurance.
The PC noted the banks’ dominant position had enabled them to withstand shocks such as the global financial cri- sis, but there were also negative consequences.
“There is evidence that they have sustained prices above competitive levels, offered inferior quality products to some groups of customers, subsumed much of the broker industry and taken action that would inhibit the expansion of smaller competitors in some markets,” the report found.
“All are indicators of the use of market power to the detriment of customers.”
Mr Turnbull said some important changes had been made in terms of regulations and the law.
“The only way trust can be restored is by banks changing the culture, putting customers first and being seen to do so — actions speak louder than words,” Mr Turnbull said.
He said the recent payouts by big banks and extra resources for regulators showed the Government was serious about the issue.
“We are determined to hold the wrongdoers to account and we are changing the law to make sure that banks do the right thing in the future, but there will be more to be done.”
In a speech yesterday, Treasurer Scott Morrison pledged a greater effort by the Government to ensure more competition in the sector and greater power for consumers.
“We need our banks strong, stable and profitable … but we also need to ensure that competition isn’t being constrained and the customers aren’t getting the raw end of the stick,” he told the Australia-British Chamber of Commerce.
Mr Morrison said while new regulations, conduct codes and penalties were important to ensure banks met community expectations, customers needed greater power and information to make decisions.
He said the Productivity Commission report would provide a plan for improving outcomes for customers, as well as ensuring the financial system is competitive and innovative.
The report found while there were almost 4000 different residential property loans in the Australian market and more than 250 credit cards, products and pricing were confusing.
The commission described it as a “blizzard of barely-differentiated products”.