The Customer Owned Banking Association has called for a crackdown on misleading and confusing banking information given to consumers.
COBA’s submission to the Competition Policy Review recommends changes to promote a stronger, fairer banking system.
“In a genuinely competitive market with real choice, consumers need to be able to easily understand the true identity and regulatory status of the entity they’re dealing with,” COBA chief executive Louise Petschler said.
“This does not always apply in the financial services market because major banks hide behind sub-brands that look like regional banks or non-banks, ‘shadow banks’ pose as regulated banking institutions, and brokers may not be on the customer’s side,” Ms Petschler said.
“This should be a serious concern for competition and banking regulators,” she said. “Consumers need real choice through clearer and more effective disclosure.”
COBA yesterday pointed to ASIC’s approach to major bank multi-branding, arguing a tougher stance is needed.
Rather than the ACCC, ASIC is currently responsible for ensuring consumers are confident and informed in financial services.
“ASIC appears complacent about addressing major bank sub-brands, such as Bank of Melbourne and Aussie Home Loans, and has not launched a campaign against the practice in banking,” Ms Petschler said.
Her comments follow those made by CUA chief executive Chris Whitehead, who told Mortgage Business he has raised the same concerns with both ASIC and the ACCC.
“We have actually raised this concern with the ACCC,” Mr Whitehead said.
“Its response was that really financial services competition is governed by ASIC,” he said.
“You go to ASIC and they say they don’t have any specific brief with regards to disclosure standards, so there is no specific requirement to disclose ownership under any legislation.
“At the moment there appears to be a bit of a vacuum with the ACCC not getting involved in financial services and ASIC having something of a different brief."