Treasurer believes “consumer power” will drive banking reform

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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.

Read the full transcript of the Treasurer’s speech

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?

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Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?



Total Comments: 90
  1. 0

    Does that then translate to “the more passive you are in voting for a government the worse government you’re going to get?”

    • 0

      Indeed it does, Ted…. indeed it does…

    • 0

      No great surprise that Morrison has sided with the banks. I mean this is a RC this government tried everything to do to bury. Now it’s up to customers? Well that worked real well for the last 20 years didn’t it.

    • 0

      That is the crux of the problem, Ted, which inadvertently Morrison has led us to think! The 2 tag teams, Liberal & Labor, have taken turns to take us for a ride – Labor sold off Comm Bank, and Libs allowed the rest with no action by the regulators (ACCC, ASIC, APRA) with Labor also looking on (when they were in power).

      Badly overdue solution – all MUST vote out all sitting members of either of these parties (and the rare Greens), by putting them last in preferences. Then, we voters may get back some power – as Morrison has indirectly encouraged us to think!

      Strong actions by regulators (with more teeth) should have been the basic minimum outcome of the RC – but no, Morrison wants to divert responsibility elsewhere (to customers) to help his ABA mates.

  2. 0

    Yes. I agree with Morrison. We complain about the ‘nanny’ state, but repeatedly want ‘them to do something about it’. The pathetic response by the public to getting better deals for power prices, lowering mortgages, changing health providers and negotiating greater flexibility in benefits, are prime examples of public ennui. Best exemplified by the sad voters in W.A. who actually thought they were voting for Pauline Hanson instead of a local candidate.

    • 0

      Simple enough – simple and easy rules are just normal functioning of a government – not some ‘nanny state’.

      What do you want? Every single depositor to go down to the bank and tell them where to get off and lay down the rules? Kinda reminds you of negotiating terms of employment as an individual rather than as a group, doesn’t it?

      Morrison is an over-entitled, over-advantaged twerp.

    • 0

      And working for whose interests TREBOR?

    • 0

      A ‘nanny state’ is better than thugs, hoodlums running rampant because the law system is ‘passive’.

    • 0

      Obviously he’s on a Treasurer Cash For Comment Contract with the Big Boys….

    • 0

      Is Crowcrag another government stooge, I wonder?

    • 0

      Guys – I wish you would respect the fact that others may have a different view from you and that they may well be right.

      Acussing everyine who has a different view to your as being a “cash for comment” post by a “government stooge” is rather silly and childish, don’t you think

    • 0

      Pray do not use my TREASURER Cash For Comment comment in regard to another user here.. I was discussion Morrison…

      I only slang off at other users who slang off at me…. otherwise I try to be an honest broker, with views of my own.

  3. 0

    Yes he is blaming customers.

    The buyer beware ‘principle’ so beloved of neo libertarians simply means that we all must be experts on everything or it is our own fault when businesses rip us off.

    Just in the past year I have needed to be an expert
    motor mechanic,
    IT service provider,
    landscape designer,
    quantity surveyor and costs clerk. Just to name the most obvious.

    My occupational expertise is in none of those areas, yet I need all of them to make my life work, and any of them can bamboozle me with little effort due to my lack of appropriate expertise.

    When Morrison says it is up to customers to choose well, he very well knows that the banksters, energy companies, developers, etc with their armies of accountants, lawyers and PR spinners, easily outgun any but the most expert of customers – which most of us never can be except in our own fields.

    Morrison is throwing us to the wolves. He does not believe there can be economic crimes against citizens, only carelessness.

    Government owes us a duty of care to restrain the wolves with regulation and enforcement, to prevent them feeding on us, the electorate/citizens/customers.

    I will never again vote for a libertarian of any party. A healthy society and economy needs balance, and government has a duty to ensure that healthy society and economy can thrive.

    • 0

      .I think that he is saying that customers should be forcing competitors to compete for their business with them on quality, value and price.
      However, the problem he hasn’t admitted is that the banks, power supply providers and other like it do not provide a robust competitive environment because they all collude to have pricing within a fraction of each other!
      If one bank offers 0.5% savings interest and the next offers 0.515% that is not robust enough competition. If the next bank offered 0.75% interest and another 1.25% then real competition begins but they don’t play hard to compete, they are complacent to be much of a muchness because majority of customers are passive. Customers are passive because majority doesn’t have the monetary power to play one bank against the other individually. Morrison meant well but it is unrealistic in the real world. It is actually up to service providers to create a robust competitive market, then you
      will see the pandemonium of suppliers competing for your dollars.
      Let the games begin!

  4. 0

    Rather odd Mr Morrison comes out with this attempt to shift the blame.

    After the Great Depression it became obvious that Classical( neo-liberal) Economics didn’t work and would result in nasty banking crises.

    The solution was re regulation and progressively higher taxes.

    As for taking ourselves out of the game. Yes we can.

    If we take ourselves out for long enough the lack of demand will force the issue just like it did in the US in 2007.

    I shop around now and happily move banks, electricity retailers, insurance providers, petrol stations etc. And I’m on a spending strike as the food prices will escalate as the drought revs up. We are old enough to have seen it a time to three surely.

  5. 0

    What uncaring arrogance from Morrison! It is impossible for a decent person to be as greedily slimy as a bank’s schemers. I cannot see much difference between banks’ scheming collusion and other organised crime.

    If ever the public needs a government to regulate grasping fraudsters it is in this matter.

    In my 66 years I’ve never heard such a nasty avoidance of responsibility from any so-called government.

    If this is allowed to pass by the PM, it is the absolute end of any pretext of decency by the LNP, who I’ve always believed to be the lesser evil of the two major parties. They will have lost me for ever. I’m sure not many of the general populace will side with the bankers.

    These near-gangsters need the addition of a few nights in the concrete cooler in addition to hefty financial penalties. There should be no difference between white-collar criminals and the common garden variety.

    • 0

      LNP the lesser evil? You forget that it was the ALP that introduced every major positive social reform since WW2 – things such as Medicare, compulsory superannuation and the NDIS.

  6. 0

    If someone is given a loan to service that is 1.2m and their income is only $50K, it should be very clear to them they cannot service this loan regardless of the fact that some of the collateral may have been from investment properties.

    However deliberate misleading information and clear cases where documents have been falsified to enable loans to be granted is nothing by FRAUD!!! To then blame this on clients without financial nous it nothing but disgusting. This is like blaming someone that trusts a surgeon is responsible when the surgeon clearly cuts out the wrong body part. At some point one has limited knowledge of everything in the world!!!

    Basically it is asking everyone to have in depth knowledge of banking systems and how they operate when often, if not always, things are conveyed in a way as to deliberately deceive or, at the least confuse, the client.

    His statements go towards “letting them off the hook”. No responsibility taken because none is needed – that is really what is being conveyed by his statement. My question is how does a “little person” take on a bank if the government of the day is not prepared to support them.

    As for the comments about nanny states…. an example of this where self regulation is the order of the day is the cladding debacle. We, as taxpayers, are footing the bill, albeit unseen, for the removal of cladding from hospitals and lots of government buildings. Why because of no real regulation. If you want to live without regulation, live in a building with cladding and take the consequences. We don’t need less, we need more… people have to be held accountable for their actions.

    • 0

      Any viable and functioning society is a mix of capitalist enterprise and regulation – without capitalist enterprise nothing much goes forward – without regulation capitalist enterprise runs the whole field and destroys the economy and the society.

      Let’s hear it from the ‘Labor is against business’ crew…. I’ve been around 69 years now and never once seen Labor against business…. they may have gone all namby-pamby over women’s, ethnic’s, and Aboriginal’s (etc) ‘rights (read special privileges not shared with the entire community – which means automatically they are NOT ‘rights’) , and abandoned their first duty to ensure fair play in the workplace in favour of ‘higher good first’ – but they’ve never actively attacked business – only required that it play by rules.

      The current situation with ‘stacked mortgages’ based on ‘equity’ from massive unpaid debt reminds me of the cause of The Wall Street Crash – people borrowing on equity in shares to buy shares and finding the cash runs dry and the shares collapse…

      Stoopid is as stoopid does…

    • 0

      Yes Pentop.
      Banks ruined many an Australian because they had the right to do so whether fair or morally corrupt. Mostly the latter on most occasions.
      Morrison is an arrogant self serving piece of work. He oozes like a used car salesman and is not alone in this government.
      For God’s sake Australians put this lot in the trash where they belong. NOTHING, I repeat NOTHING could be half as bad….and for any of our resident LNP trolls spouting ‘debt’ don’t get me started.

    • 0

      Wait until they get finished with the farmers during this drought…. then it’ll be a fire sale of all the grazing and growing property to any Asian comer…

  7. 0

    What a great idea..let’s go into competition with the CBA, NAB et al. Any takers? And while we’re at it we can go into competition with Coles, Woolies, Qantas and Virgin. Have any small players ever been able to successfully compete or do they simply get swallowed up by the big guys?

    • 0

      Actually we need a bank of mum and dad (not the kids). A peer to peer project. The over paid CEOs and their Boards will take notice of that……….and quickly make sure to make this illegal.

  8. 0

    So…. after all the hoo hah has died down our Liberal representatives still believe that the market will fix everything… a bit like the ‘trickle down economic theory’. Why should our government do anything to correct the wrongs done to its citizens. After all, when left to their own devices, most corporations demonstrate social consciences and change things for the good of society voluntarily.
    Do they bullshit!! This is the continuation of the ‘Predator Theory’. The powerful eat up the weak and lick their lips at the thought of more to come.
    Banks, Insurance companies and Super funds need to be reined in and controlled. More importantly, politicians need to be reined in and given a clear message, ‘YOU CANNOT GET AWAY WITH RIPPING OFF YOUR CONSTITUENTS’.
    Labor is not perfect and does some stupid things at times, but credit where it is due. Mr Shorten and his mates forced this Enquiry on the government and it has shown what a disgrace those in power are. Now let us see if Mr Shorten and his mates will follow it up and force the creation of a national ICAC and a financial industry commission which will make those ‘bastards’ play fairly.

    • 0

      I won’t hold my breath waiting for shorten and co to do much – they’re way too busy pushing through the Great Socialist Equalisation Revolution – by shoving some down into the gutter so their chosen ones can rise above it…

    • 0

      Correct andromeda. Labor has its bad behaviour as well but this is nothing compared to what the current LNP government has done over the past 6 years and the debt it has raked up for the nation. I can’t believe that even the right wing propaganda media could let $600 billion ride but that is what it has done.

  9. 0

    What would you expect? This guy was an executive with the Property Council of Australia for so many years, his opinions have been formed similar to those of Turnbull’s while working for the giant squid (Goldman Sachs). And then he announces that GST shouldn’t apply to female sanitary products to show how in tune he is with normal folk yeah right. When will people realise that the cabinet is made up of these people who fully support free markets and trickle down theories which have no basic in fact but are ideologies and entirely anti-social? Remember these parasites at the polling booth and don’t forget that the Abbotista and his ilk are lurking in the wings. Pauline Hanson has nothing on these guys.

  10. 0

    I cannot tell a lie – I HELD that bank up at the point of an armed contract and demanded they pay ME fees for handling my money……

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