COBA supports ACCC push for competition inquiry into banking
The Customer Owned Banking Association has backed the competition watchdog’s call for an inquiry into the pricing power of the big four banks.
The Australian Competition and Consumer Commission chair Rod Sims made the call at a parliamentary committee in Canberra on Wednesday.
According to reports in the Australian Financial Review, Sims wanted a “deep dive” inquiry into the banks’ pricing power adding that big bank customers – like electricity customers were hit with a “loyalty” tax with newer customers benefiting from lower interest rates then existing customers.
The AFR reports that no formal request has been made by the ACCC however to the government.
“The Financial Services Royal Commission looked into misconduct, now is the time to look into competition,” COBA CEO Michael Lawrence said.
He added that request from the ACCC was encouraging for credit unions, building societies and mutual banks who have been leading the charge for a more competitive retail banking market.
“The enduring solution to concerns about the banking market is action to promote competition.
“We don’t have sustainable banking competition at the moment. A lack of competition can contribute to inappropriate conduct by firms, and insufficient choice, limited access and poor-quality products for consumers.
“We strongly support the ACCC’s calls for an inquiry to examine the banking industry’s competitiveness. It’s encouraging to see that the ACCC and Tim Wilson MP share our sector’s concerns about competition and what an uncompetitive banking market means for consumers,” Lawrence said.
He highlighted that last year’s Productivity Commission’s report on competition in banking sent strong messages to regulators and policymakers that regulation is hurting competition and consumers are paying the price.
“The regulatory framework over time has entrenched the dominant position of the largest banks.
“The PC report shone a light on a problem that is not well enough recognised – that more and more regulation can be harmful to consumers because it weakens competition.
“The Productivity Commission found that competition drives innovation and overall value for customers.”