Home' Connexus : Issue 45 Contents to support stability and a low-growth environment,
or open the way for a riskier approach that could
deliver a stronger economy, higher living standards
and greater innovation.
“What the fnancial inquiry needs to do,” he says,
“is make sure we have a suffcient array of fnancial
institutions and markets that are operating with
probity so individuals can make that trade-off for
themselves, and the country in aggregate can trade
off economic growth versus stability.”
Dubbed the 'son of Wallis', the FSI is the third
major review of Australia’s fnancial system in
recent decades. There was also the Campbell
inquiry in 1981.
Joining Murray on the panel are Professor
Kevin Davis, Craig Dunn, Carolyn Hewson and
Dr Brian McNamee.
The Campbell and Wallis reviews ushered in
major reforms, and Harper says there is potential
for the FSI to “turn things up and around” beyond
"It would be true to form if it ended up doing
that, so it shouldn’t be underestimated.”
Credit unions, building societies and mutual
banks are certainly expecting the inquiry to
People's Choice Credit Union managing director
Peter Evers says customer-owned banks welcome
the inquiry, but the major banks don’t want it,
"which just goes to show how much market power
they have and how comfortable they are, if they
don’t see a need for it”.
While Evers is confdent the panel will
recommend some reforms at the higher end of the
fnancial system, he says the jury is out on whether
it will open the way for a more level playing feld for
customer-owned and regional banks.
"[Murray] hasn't indicated that he is looking for
greater competition anywhere that I have seen,
even though that’s in the terms of reference.”
Evers is pleased that Davis, a respected
economist and former chair of Melbourne
University Credit Union, is on the panel.
"He has empathy for the sector and its
opportunities. So, on balance, I'm expecting at least
some outtake to enhance competition.”
The task for customer-owned banks is to make
their voice heard.
“We have promoted this inquiry,” says Evers,
"and we need to be on the front foot and put a very
coherent case on the table.”
The Customer Owned Banking Association has long
championed another major fnancial system inquiry
and hopes it can address an unfair cost-of-funding
advantage for major banks and inadequate incentives
for genuine competition in the banking sector.
As part of a broad wish list, it hopes the inquiry will:
• Level the playing feld by promoting competitive
neutrality in the pr udential framework and tax
• Explore ways to accommodate the customer-
owned banking model.
• Improve competition in the banking sector to
deliver greater diversity and stability.
• Assess the performance of regulators in
supporting a competitive and diverse banking
Bankmecu chief executive Damien Walsh echoes the
views of customer-owned banking leaders contacted
by Connexus when he says the FSI fnally gives the
sector a voice to air its concerns and hopes.
“Now we’ve got a for um,” he says.
Walsh is hoping for three key outcomes: the
ability for customer-owned banks to distribute
franking tax credits to members; greater
transparency around big banks' multibranding
strategies; and a fairer risk weighting of assets for
regulatory capital for smaller institutions.
"That would certainly make it clear to me that
our voice has been heard,” he says.
Commonwealth Bank, NAB, Westpac and ANZ
are sure to try to defect the competition argument
by noting that there are more than 100 institutions
in the market, says Walsh.
"That ignores the fact there is a concentration
of power. And over the long term, that is not
advantageous for Australian consumers.”
The customer-owned sector has the public in
In a recent Essential Research sur vey of
Australian adults, more than three-quarters
of respondents said they believed consumers
would beneft from stronger competition to the
Queensland Country Credit Union CEO Aileen
Cull is calling on the Abbott government, through
the FSI, to reverse the emphasis on regulation in
the fnancial sector at the expense of competition.
“There have been some terrifc changes as a
result of some of the inquiries going back over
the years, and I’m hopeful we can see signifcant
change out of this one as well,” she says.
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