In his appearance before the House of Representatives’ standing committee on economics, Rod Sims, commissioner of the Australian Competition and Consumer Commission (ACCC), backed the introduction of a Treasury-led inquiry into competition in the banking sector.
Pointing to previous research conducted by the ACCC, Mr Sims claimed that banks “don’t compete enough”, adding that a lack of competition in the sector had contributed to mistreatment of customers identified in the banking royal commission.
“[There] are competition issues [and] you can think about the timing that you can deal with them, but I think they need to be dealt with,” he said.
Reacting to Mr Sims’ remarks, CEO of the Customer Owned Banking Association (COBA) Michael Lawrence said: “The enduring solution to concerns about the banking market is action to promote competition.”
“We don’t have sustainable banking competition at the moment. A lack of competition can contribute to inappropriate conduct by firms, and insufficient choice, limited access and poor-quality products for consumers.
“We strongly support the ACCC’s calls for an inquiry to examine the banking industry’s competitiveness.”
Mr Lawrence claimed that regulatory measures employed in the past had “entrenched the dominant position of the largest banks”, pointing to findings of the Productivity Commission’s (PC) inquiry in competition.
“The PC report shone a light on a problem that is not well enough recognised – that more and more regulation can be harmful to consumers because it weakens competition,” he said.
“The Productivity Commission found that competition drives innovation and overall value for customers.”
He concluded: “The financial services royal commission looked into misconduct; now is the time to look into competition.”
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