Consumers are saying the Government needs to bring balance back into banking writes our CEO Don Magin.
A national survey released this week shows the majority of Australians (65 per cent) believe that there is not enough competition in the Australian banking system.
The online survey of 1,000 people in December by independent company, D&M Research, also found that 79 per cent of people believe that the big banks make excessive proﬁt and 54 per cent feel that banks do not treat their customers fairly on home loan rates.
The customer owned (mutual) banking sector and other experts such as Professor Ian Harper (a member of the Wallis Inquiry, the last major inquiry held into the banking system) have been saying for some time that due to the fall-out from the global financial crisis and current industry regulations, the big four banks have an unfair advantage in the Australian mortgage market.
This new survey should show Government that consumers (voters) also share these concerns. The survey shows 71 per cent of people agree that the banks have an unfair advantage. Two-thirds of Australians believe that it is unfair that credit unions, building societies and mutual banks have to pay more than the banks to the government to guarantee their deposits. (I was surprised that the figure was not higher. Why should a customer of a building society or credit union have to pay more to guarantee their savings than a customer of a bank?)
The survey results also back up another issue that mutuals have been highlighting. Half of the people surveyed were unaware of the big banks’ ownership of smaller competitors. More than 80 per cent of people are unaware that the big four own certain home loan lenders. Commonwealth Bank owns Bankwest and 80 per cent of Aussie, Westpac owns St George Bank, Bank of Melbourne and other financial brands. For consumers, the ownership of these “sub brands” is further clouded when their advertising promotes them as an alternative to the big four – their owners. Watch this video to see how many people do not really know with whom they are banking.
Having the level of power and control that the banks have is something that, sensibly, most Australians don’t believe is a good thing for this country.
The Government now has evidence before it that consumers (voters) also think the Big 4 banks have too much influence, make too much profit and do not face enough competition.
What is the solution? The banking system needs balance. The best way to do that is to have an independent inquiry to look at the current rules and change them to create a more level playing field. Not the big banks setting the agenda, nor the mutual sector setting the agenda. An independent umpire acting on behalf of Australian mortgage holders, self funded retirees as well as those of us just trying to pay the bills or save for a home, a car or holiday.
People are tired of the big banks making massive profits and being so dominant.
It is time for the Government to listen to the people and take action. Let’s change the rules and bring balance back into banking to favour consumers, not the banks. It is time to make your voice heard. Follow the movement or have your say at www.balancebanking.com.au
Don Magin is also chairman of ABACUS as well as CEO of Greater Building Society.