Federal treasurer Scott Morrison has flagged moves to examine the market power of Australia’s big four banks in tomorrow night’s budget.
The budget will reportedly include policies aimed at improving competition in Australia’s financial services sector and a Productivity Commission inquiry that would look at further reforms including the possible separation of retail and financial advice arms.
“There should be no denying that there has been an increased consolidation of the position of the major banks,” Morrison said in an interview with The Australian Financial Review.
He added it was important “that we understand what are the barriers and what are the things preventing customers getting a better deal and being able to secure that.”
The move on the banks comes as the Turnbull government shapes up to use this year’s budget to neutralise key political strengths of the opposition, by reshaping the conversation on government borrowing and school funding. Labor proposes a royal commission into the banking system, which would address causes of the banking scandals of recent years, including activities at their financial advice arms.
The AFR report by Phil Coorey says the Productivity Commission terms of reference would including looking at “the level of contestability and concentration in key segments of the financial system, including the degree of vertical and horizontal integration,” and the implications for competition.
Vertical integration refers to the banks’ running of financial advice arms, which have been used to sell customers in to investment products run by the banks.
“One of the things we want to see achieved … is improved competitiveness in the banking system to ensure than banking customers get the best deal,” he said.