Big banks creating 'false perception of competition'

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Bankmecu’s managing director, Damien Walsh, is calling on the Australian government to require banks to prominently disclose ownership in all advertising of wholly owned subsidiary sub-brands.

In a statement released this week, Walsh says that, for instance, customers taking up Bank of Melbourne’s new promotional rates should be made aware that they’re actually banking with Westpac.

A Westpac spokeswoman however says such a legislative change is unnecessary.

"Bank of Melbourne has brought real competition to banking by consistently offering Victorians a better deal. Banks that offer relevant and competitive products and services will win customers. In our advertising we clearly state that we are a division of Westpac," the spokesperson said.

But Walsh says this isn’t always the case.

“Multi-brand strategies being executed by the major banks are creating a false perception that there is competition in the banking market place because there is no transparency in the marketing of the sub-brands.”

He says the government has already set a precedent for helping consumers make informed decisions, after bringing in legislation requiring financial institutions to publish a comparison rate alongside the offered rate.

In a survey of more than 1000 Australians conducted by Bankmecu earlier this year, Walsh says 74% of respondents said they would support requiring banks which are wholly owned by other banks to disclose their ownership in their advertising.

“This is an easy and simple step that the Government can take to deliver on its promise to ensure that there is competition in the Australian banking market by helping consumers to make informed decisions about their banking.”

Westpac currently operates a multi-brand strategy that includes subsidiary lenders Bank of Melbourne, BankSA and St George, while The Commonwealth Bank owns Bankwest.

 

 

 

 

  • Country Broker on 28/11/2012 12:45:41 PM

    This is so true and correct . It is time the pblic understood who the are really dealing with.

  • Steve McClure on 28/11/2012 12:41:10 PM

    I disagree. It won't change consumer's behaviour and objectively, the non-disclosure isn't detrimental to the consumer. So, why introduce yet another layer of bureaucracy? When are we going to stop trying to control the market by legislation and let competitive forces prevail? We've already seen a decline in productivity from overzealous legislators. You might think its fine if just the big end of town has to do it, but further un-necessary disclosure impacts us all.

  • Incognito on 28/11/2012 11:59:02 AM

    Good point Patrick.

    Volume hurdles ARE indeed fishy..

    I need to highlight this to my clients as the reason i don't offer CAB or Westpac loans.

    Nice tip thanks.

  • CW on 28/11/2012 11:18:36 AM

    St George mortgage documentation shows the security is ultimately held by Westpac. All brochures and marketing do to. Interest pricing and credit policy is different, and the products are different (quite different in fact - WBC don't have a LOC with half the functionality of StG Portfolio Loan).

    There is no "false perception" of competition if the sub-brands actually compete in the same segment and have different products that aren't just a relabelling of the same loan.

  • Patrick on 28/11/2012 11:01:36 AM

    When a financial planner writes a Statement of Advice part of required disclosure is any ownership or other interest which may result in a conflict of interest and any bonus or override commission received due to recommendations made or volume achieved. Similarly brokers ought to disclose such issues in a Credit Proposal, eg Aussie/CBA. Further where a major has volume hurdles to maintain accreditation, this should be disclosed as a potential conflict of interest. I simply do not hold accrediation with any lender who has a volume hurdle and I disclose this fact to all clients as the reason why their products are not available through me. Wake up ACCC, volume hurdles are, in my view, a covert restraint of trade.

  • ozboy on 28/11/2012 10:07:47 AM

    He certainly does, what about RAMS with Westpac and Aussie with CBA (although only part ownership). Perhaps take it a step further and also include the Aggregators and their ownership details so that clients know exactly who has a share in whom. Transparency is the key.

  • Nic on 28/11/2012 10:01:37 AM

    About time this point was brought up. Also all lenders with bank ownership or part bank ownership should not be referred to or promoted as non-banks.

  • Coast Broker on 28/11/2012 9:59:25 AM

    I am sure all Advertising with St George states that they are a subsidiary of Westpac.

  • Incognito on 28/11/2012 9:39:16 AM

    I agree.

    There seems to be some hocus pocus going on from the banks..

    This guy might have a point

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