Majors could be forced to rethink branding

The big four will have to rethink their brand strategies if the Financial System Inquiry this month recommends changes to disclosure rules to better inform consumers.

COBA acting chief executive Mark Degotardi said major bank multi-brand strategies are intended to lure customers who don’t want to bank with a major bank.

“Our consumer research suggests major banks are getting away with portraying their sub-brands as independent competitors,” Mr Degotardi said.

“The FSI interim report flagged the need for disclosure reform and ASIC’s second-round submission to the FSI said reforms should be considered to allow consumers to make an informed decision about who they are dealing with,” he said.

“We strongly endorse ASIC’s observation that ‘consumers who choose a particular brand to deal with may not realise that the brand is owned by and operates under the banking licence of a larger banking institution.’”

This month, Westpac-owned Bank of Melbourne commented that ‘there is a large proportion of the population who want to bank with a local bank’, according to COBA.

While COBA agrees with the Bank of Melbourne’s observation, it flatly rejects that the Bank of Melbourne is a ‘local bank’, highlighting that it is a wholly-owned subsidiary of a Sydney-based major bank.

“There are plenty of locally owned and operated banking options in Melbourne, but consumers shouldn’t be under the misapprehension that Bank of Melbourne is one of them,” Mr Degotardi said, pointing to other major bank sub-brands RAMS, UBank, Aussie Home Loans and Bankwest.

“These sub-brands should clearly and prominently disclose in all advertising and all customer-facing material that they are owned by a major bank,” he said.

“This would promote genuine competition in banking because it would be easier for consumers to exercise real choice.”

Mr Degotardi added that major banks posing as local banks, regional banks or non-banks is not genuine competition.

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