Bringing Associations Together To Boost Performance

Menu

Banks back reforms to savings, loans, competition in sector

The banking sector has welcomed a suite of reforms announced by the federal government on Friday, which would see them forced to provide more information to borrowers and savers and make switching easier.

Both the Australian Banking Association, representing the big lenders, and the Customer Owned Banking Association, on behalf of the country’s smaller banks, moved to support the proposed changes over the weekend. This comes after Treasurer Jim Chalmers announced the government would implement the recommendations from a number of inquiries into the banking sector. The government will also commission an investigation into the regulation of smaller and medium-sized banks, including how they sourced funding and whether current arrangements supported new entrants and additional competition in the sector.

The ABA said the changes from the government would ensure “more consistency for customers” with chief executive officer Anna Bligh noting many banks were “already doing a number of things to make it easier for customers to get information”. But Ms Bligh said the proposed changes from the government would “mean every bank will have to do it and it means for customers it doesn’t matter who you bank with”.

Under the proposed reforms banks would be required to tell customers when interest rates or savings rates changed. Comparison websites, providing information on banks and lending or savings products, would also be required to disclose how they ranked products and what financial relationships they held with product providers. Ms Bligh said banks were keen to see this information disclosed “in a clearer way”.

“I think transparency on these sorts of relationships is a good thing for customers,” she said. “I think it makes customers very aware and makes them I think more savvy when they’re looking for the best price whether they’re a depositor or they’re looking for a loan.”

COBA said the inquiry into the regulation of smaller and mid-sized banks, which would be run through the Council of Financial Regulators in consultation with the Australian Competition and Consumer Commission, should recognise “different models, as well as the size and complexity of a bank”.

COBA chief executive Michael Lawrence said the current regulation of smaller banks was “slowly depleting our sector’s competitive advantage, because customer-owned banks have to allocate disproportionate resources to compliance, rather than servicing our customers and communities”.

Mr Lawrence took aim at the Australian Prudential Regulation Authority’s move to change liquidityand capital standards, warning they “will erode vital competition in a market dominated by a handful of major players”.

Bendigo Bank chief executive and managing director Marnie Baker said the proposed inquiry into regulation of small and medium-sized banks acknowledged the importance of the sector. “We look forward to discussing new ways to level the playing field for all small and medium-sized banks,” she said. “The Australian banking landscape is better off with our presence and all Australians will benefit from a system that offers more choice.” Westpac consumer chief executive Jason Yetton said the bank supported “increasing transparency to help Australians make more informed decisions about their money” noting the lender had “already taken action on many of the issues raised”.

Taken from The Australian on June 16, 2024

Back to latest news stories


Cat Herder July 2025
BE Victoria July 2025