Australia’s competition regulator is going after the banking industry in the country, vowing to punish what it claims is misconduct, reported The Financial Times.
The report, citing Rod Sims, chief executive of the Australian Competition and Consumer Commission, reported that having more competition in the banking industry is the ideal way to fix the industry. According to the report, ANZ Bank, Westpac, Commonwealth Bank of Australia and National Australia Bank have 75 percent market share in Australia and are able to access lower funding costs than their smaller rivals. That has created an unbalanced market in terms of competition in the country.
“Market economies only work properly if you have competition, and we have to make sure there is more in banking,” Sims told The Financial Times in the interview. “We have to fix the cozy oligopoly,” he said of the Big Four. “They have to feel under threat.” The government official said the Competition and Consumers Commission is looking at ways to remove regulatory barriers that hurt smaller banks and would push to promote opening banking rules that make it easier for consumers in Australia to easily switch banks. He noted that regulators shouldn’t have allowed Westpac to merge with St George Bank back in 2008, reported The Financial Times.
According to the report, the Australian Competition and Consumer Commission is working alongside other regulators to make sure the bank capitalization requirements benefit the four big banks and hurt the smaller banks in the country. The competition and consumer commission is also looking at rolling out market studies to pinpoint regulatory and legislative fixes that will enhance competition among banks in Australia, noted the report. The official noted that FinTechs aren’t mature enough to address the competition problem in the country and thus the need for regulation. He told The Financial Times it’s not clear if the FinTechs want to take on the big banks or want to partner or be acquired by them.