The Australian Securities and Investments Commission (ASIC) faced a parliamentary inquiry on Friday, answering questions about compliance in the banking sector and the possibility of lenders offering tracker mortgages.
In front of the Standing Committee on Economics, ASIC chairman Greg Medcraft said that there “clearly has been a poor compliance culture” in the big four banks.
However, there “has been a significant change” with the banks “making significant efforts,” he told the inquiry.
When asked whether ASIC would need additional powers to ensure compliance in the banking industry, Medcraft said the Commission would function better with a further product governance obligation, expansion of enforcement penalties and the addition of a competitive power.
Medcraft’s prior comments about the need for banks to offer tracker mortgages were also raised by the committee.
“The benefit for consumers is transparency, timing and comparability,” he said.
As SVRs are not comparable between banks, “this results in a behaviour that consumers don’t move banks,” Medcraft told the Committee.
On the other hand, tracker mortgages “allow true comparability” and “true competition,” he added.
“It’s very understandable [of the banks]. It’s very nice if you can change costs any time that you want.”
One of the benefits of tracker mortgages is that they allow for more movement into the secondary mortgage market, he said. Furthermore, the idea of tracker mortgages was not a new concept he added since corporate Australia already has them with loans following the bank bill rate.
“I see this as an evolution and not a revolution,” Medcraft said.