Treasurer believes “consumer power” will drive banking reform
Rounds one to four of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry are over, with the Government delivering a response to the commission's investigation of the banking sector.
Federal Treasurer Scott Morrison on Friday outlined the Government’s planned response to the commission’s findings, citing a focus on banking competition and the need for “more players” as the answer to all the sector’s problems.
That, and, blaming the customer for being “complicit in allowing the deck to be stacked against us”.
In his speech to the Australian British Chamber of Commerce on Friday, the Treasurer said that Australia’s banking and insurance markets are dominated by a “handful of players” giving them an “entrenched, dominant market position”.
He acknowledged that a Productivity Commission report found evidence that banks have “sustained prices above competitive levels [and] offered inferior quality products to some groups of customers” but he refused to admit that competition in the sector had weakened.
Yet he said that increasing the number of “players in the market” will create “a level playing field, so competition can thrive”. These are the strategies the Government will put in place to create industry reform.
Then, it seems, the rest is up to you.
“For all the success of these reforms so far, the one that matters most in the minds of customers is will I get a better deal?” said Mr Morrison.
“Too often we, the customers, have also become complicit in allowing the deck to be stacked against us. You can guarantee it, the more passive a customer is, the worse deal they are going to get.
“I believe that real market power needs to be put back in the hands of the customer.
“Power to change their circumstances. Power to get a better deal on their mortgage, on their credit card, on their business loan. Power to change the system. Power to control their own data and reap the value of its use, rather than those who have been using it for decades … for their own advantage and not yours.
“And we the customers have a role to play in this. Customers must stop being passengers and bystanders in their own cause.
“There is no one more committed to looking after your interest than you. You can't take yourself out of the game and listen to those who want to infantilise you by promising a cotton wool regulatory system, with nanny-like regulators, that rather than awakening and empowering your consumer power, will rock you off to sleep.”
As far as Mr Morrison is concerned, the Government will have done its job once it has introduced more players to the market. A strategy with which, the Australian Banking Association (ABA) agrees.
“The ABA believes strongly that competition will improve further with the introduction of Open Banking, Comprehensive Credit Reporting and regulatory reforms to further reduce barriers to new entrants.”
The royal commission may have taken a few scalps along the way, but condemnation of poor banking practices and any further announcement of stricter regulation of the sector seemed to be missing from the Treasurer’s speech.
The focus seemed to be on the Government delivering more of the same ‘players’ to an already unruly playing field. But does more choice simply mean more responsibility on you to sort the wheat from the chaff?
“While the Government can create an environment that gives you better tools to make an informed decision, it is only you as a customer who can actually make that decision. And it is you who lives with the outcomes,” he said.
Are you happy with the progress of the royal commission? Do you think the Government’s response is appropriate? Apart from stricter lending protocols, are you aware of any other regulations that restore your faith in the sector?
Join YOURLifeChoices, it’s free
- Receive our daily enewsletter
- Enter competitions
- Comment on articles