The industry fund-owned ME Bank has written to FSI chair David Murray calling for mandatory disclosure requirements to combat conflicts created by vertical integration in financial services.
In a letter penned by ME Bank chief executive Jamie McPhee to the Financial System Inquiry chair, the bank recommends enacting “measures that address increasing levels of vertical and horizontal integration including mandatory disclosure regarding fees/commissions and market structures”.
In addition, Mr McPhee calls for “competition impacts” to be included within regulatory impact statements and for increased assistance to small businesses and start-ups.
The letter accompanied ME Bank’s joint submission to the FSI with the Bendigo and Adelaide Bank, Bank of Queensland and Suncorp Bank, in which the “regional banks” also voiced concerns about the impact of vertical integration on financial service provision.
“With the major banks now dominating retail banking markets, their reach into other financial services has increased and is likely to increase further,” the joint submission states. “The major banks are now large players in superannuation, wealth management, stock broking and insurance.”
Industry Super Australia also took aim at the concentration of Australia’s banking sector in its submission to the FSI, released this morning, claiming a lack of competition is keeping consumer prices for financial services unnecessarily high.
“It is reasonable to expect that consumer prices would improve if Australia’s banking system became more competitive,” the submission states.
The industry fund lobbyist has proposed that the Murray Inquiry consider a number of proposals aimed at “ensuring that market power in banking cannot translate into market power in other areas of financial services (particularly wealth and superannuation which may compete with banks in the funding market)”.
Among a number of recommended responses, the submission suggests the panel consider “eliminating the competitive distortions arising from the government implicit guarantee”, possibly by establishing a recovery payment to government from the major banks.
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