In the red corner
As a Government, we’re focused on the bread-and-butter issues in front of New Zealanders right now – the cost of living and recovering and rebuilding from Cyclone Gabrielle.
We’ve been clear in calling on all those who may have the ability to ease pressure on struggling Kiwis to do so, and banks are included in that. New Zealand has a concentrated banking sector, with four major banks undertaking 85% of mortgage and other lending.
A return to heavy-handed regulation would stifle innovation, and create the risk of the market exploiting gaps in the rules. That’s why we’re putting in place sensible policies that will deliver a better deal for Kiwis by increasing competition and putting more power in the hands of bank customers.
Last July, we established a consumer data-right framework which requires data holders like banks to ensure New Zealanders can gain access to a wider range of products and services that better meet their needs. We announced banks would be the first sector to implement the mechanism. As part of this, we are moving ahead with ‘‘open banking’’. Open banking ensures banks must share customer information if they request it, making it easier for New Zealanders to compare mortgage rates, apply for loans and switch banks – improving competition by enabling customers to get better deals. It is a common tool used overseas in places like Australia and the UK.
We’re also taking back full ownership of KiwiBank.
This will allow KiwiBank greater operational flexibility by simplifying the ownership structure and, potentially, access to capital to grow and challenge the four big banks.
Although Australia has the same big banks as us, it now has 97 banks in total, compared to our 27 – many of which aren’t full retail banks so the vast majority of customers are concentrated with the big few. The benefit of this extra competition in Australia can be seen in the bank margins (the profit they make between their borrowing and lending).
In addition to supporting families with the cost of living, including with our fuel tax, increases to the minimum wage and subsidising public transport, we’re moving forward with our plan to make sure Kiwis get a better, fairer deal at the bank. At a time when cost of living is high around the world, we believe that Kiwis should have the power to shop around, and make sure they’re getting the best deal from their banking arrangements.