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The Customer Owned Banking Association (COBA) said the royal commission into banking scandals may help deliver justice to victims of past major bank misconduct, but the key to a better future is implementing the Financial System Inquiry (FSI) reform agenda.
“The FSI issued a pro-competitive blueprint in 2014 but there is a lack of urgency about implementing the reforms,” COBA CEO Mark Degotardi said.
“The best way to make major banks lift their game is to increase competitive pressure by levelling the playing field and promoting genuine consumer choice,” he said.
“The major banks need to learn the hard way, by losing market share to their smaller competitors. At the root of the major bank scandals is a business model that is aimed at maximizing short-term profits.”
The COBA chief said not even a royal commission can force the major banks to become “customer-centric”.
“The major banks will always put their shareholders before their customers. There is only one customer-centric business model in the banking market and that is the customer-owned model.”
Mr Degotardi said the major banks have become so systemically important that a senior executive with the prudential regulator recently observed they are “almost too big to get sick”.
“The FSI recommendations to fix these problems should be implemented without delay,” Mr Degotardi said.
“Major banks may or may not have rigged the benchmark interest rate but what is beyond doubt is that the entire banking market is rigged in favour of the major banks.”
[Related: New poll calls for FSI action: COBA]