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The majors are currently able to hold less capital than their smaller competitors because of regulatory distortions.
The smaller lenders have been calling on the government, through various FSI submissions, to create a more level playing field on capital, which they believe will secure the long-term stability of Australia’s banking sector and provide a more competitive marketplace.
Speaking to Mortgage Business, Customer Owned Banking Association acting chief executive Mark Degotardi said he is confident that these calls will be heard.
“We’re confident the FSI will put constructive recommendations on these matters to the federal government and we look forward to the release of the FSI’s final report next month,” Mr Degotardi said.
“Requiring systemically important banks to hold more capital and fixing unfair regulatory settings is not ‘gold-plating’ the system, it is good policy that protects the system and benefits consumers,” he said.
“The major banks should not be shielded from competition through regulatory artifice.”
The FSI will publish its final report next month.