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Connexus : Issue 41
banks being too big to fail has hurt smaller players and contributed to an emphasis on stability over competition in the banking sector. A review could help address this problem. “A key issue is an ack nowledgment of customer- owned institutions in the regulator y framework so our members can prosper in an environment that is competitively neutral,” she says. The bias towards major banks means they can obtain f unding at a lower cost than mutuals. Petschler says it is apparent that gover nment policy changes as a result of the GFC – including a funding guarantee that was skewed in favour of larger financial institutions through an unfair fee str ucture – have adversely affected smaller lender s and their ability to source funds for growth. “ The gover nment guarantee had the effect of supporting the major banks’ credit ratings and prov iding cheaper access to funds (than) mutuals were afforded,” she says. “ We should ack nowledge the detailed work the federal gover nment has made in supporting smaller institutions like us under its ‘fi fth pillar’ package. “ We have recognised the strong effor ts the gover nment has made to promote our sector and intr oduce pro consumer initiatives like account switching that encourages more competition. “It was certainly the right course for the gover nment to go for stability as the GFC unfolded. “But we think an inquiry is now needed so we can sit back and have a really good look at our financial system, so we can stimulate competition and @ www.abacus.org.au 33