In its new submission to Treasury, the MFAA stresses that it has been a strong advocate of enhanced competition in the lending sector, a point made in its two submissions to the FSI.
“Accordingly we support the thrust of the FSI Recommendations 1, 2 and 3 regarding capital levels, narrow mortgage risk weighting differences and loss absorbing and recapitalisation capacity,” it said.
“We strongly support the report’s drive to enhance competition by recommending a ‘review of the state of competition in the sector every three years, improve reporting of how regulators balance competition against their core objectives, identify barriers to cross-border provision of financial services and include consideration of competition in the Australian Securities and Investments Commission’s mandate’.”
The industry body slammed David Murray’s recommendation to scrap SMSF lending but agreed with his suggestion to extend consumer unfair protections to small businesses.
“There appears to be a view that small business owners are more likely to be more sophisticated in financial management including in borrowing,” the MFAA said.
“In reality, the majority of small business owners depend upon advice from relevant professionals including brokers, accountants and lawyers, but will very often depend upon their own perceptions and assumptions about the validity of terms in standard contracts in much the same way that consumers do, resulting in an enforced acceptance of sometimes inappropriate contract terms from organisations with which they are forced to do business.”
The MFAA made a separate, joint submission against the recommendation to ban direct borrowing in super funds. The joint submission was supported by the Association of Financial Advisers (AFA), the Financial Planning Association of Australia (FPA) and the Commercial Asset Finance Brokers Association of Australia (CAFBA).