Powered by MOMENTUM MEDIA
subscribe to our newsletter

Govt accused of copying UK banking ‘playbook’

The former CEO of an ASX-listed mortgage provider believes the 2017 federal budget has “brazenly copied swathes” of the UK’s “old playbook” by insisting on a bank tax.

In the United Kingdom, a bank levy was announced in direct response to the UK taxpayer-funded bail-outs of Lloyds TSB, HBOS and Royal Bank of Scotland in 2008/09.

“It was not simply a function of the UK government’s desire to fill a long-term revenue hole in its budget,” Pepper’s former co-group chief executive Patrick Tuttle told Mortgage Business.

“The government appears to be taxing the big banks without giving more careful consideration to the significant differences between the Australian and UK banking and mortgage lending markets, particularly the very different level of distress which was felt in the UK in 2008 (at the height of the global financial crisis) when many of these measures were first implemented,” he explained.

“As for the bank levy, it should simply be called out for what it is, a tax on a highly profitable sub-set of five Australian banks to help fast-track a future budget surplus,” Mr Tuttle said.

Advertisement
Advertisement

“Despite attempts to retro-fit an underlying social purpose, the levy will not in any way ‘level the playing field’ between the major banks, the regional banks, smaller ADIs and non-bank financial institutions,” he said.

In addition to the bank levy, Mr Tuttle argues that excessive intervention on macro-prudential controls, government over-reach into bank corporate governance, coupled with “unwarranted additional regulation of the non-bank sector”, could inadvertently trigger a “severe housing market downturn”.

The former Pepper boss also believes these measures could lead to a reduction in consumer choice and confidence, and in some cases a lack of access to credit for certain borrowers.

“This is a recipe for disaster,” he said.

[Related: APRA controls on non-banks could trigger 'credit crunch']

PROMOTED CONTENT


Govt accused of copying UK banking ‘playbook’
mortgagebusiness

Latest News

A high rate of loan repayments through the pandemic has somewhat slowed the growth of Heritage Bank’s book, despite a surge in approvals. ...

Small and medium-sized enterprises were the most commonly targeted victims of cyber attacks in the last financial year, according to new rep...

An overwhelming majority of Pulse Credit Union members have supported the proposed deal with Teachers Mutual Bank Ltd, with the two companie...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.