Report condemns big Aussie banks

AUSTRALIA’S big banks have used their market power to “insulate themselves from competition” and bolster their profitability, the Productivity Commission says.

In a scathing report on competition in the financial services sector, the government advisory body outlines a shopping list of reforms for the industry.

Banks have been able to boost their earnings by keep- ing customers in products that don’t suit their best interests, the report says.

“What often is passed off as competition is more accurately described as persistent marketing and brand activity designed to promote a blizzard of barely differentiated products,” it says.

Lawyers who helped victims of misconduct cases examined during the banking Royal Commission said the Federal Government needed to implement the reforms.

“Trust is broken in our banks and lenders,” Consumer Action Law Centre senior policy officer Katherine Temple said. “This is a mess of their own making. They can’t be trusted to fix the problem and it is up to government to implement this urgently.”

The Productivity Commission gave its final report to the Government on June 29. It was released yesterday by Treasurer Scott Morrison.

Mr Morrison encouraged consumers to switch banks, saying that for a typical home loan, “the price of loyalty” was between $66 and $87 a month.

The report recommends every bank be forced to appoint a “principal integrity officer”.

The report also says the “four pillars policy”, where the big four banks are barred from merging, is a “redundant convention”. There is no evidence it helps competition and it may have in fact “dissuaded it by embedding a fixed market structure”.