The Big Four should be forced to disclose parent relationships with smaller banks to consumers, who are being duped by illusions of competition, said Credit Union Australia.
In its submission to the financial systems inquiry, Australia’s largest customer-owned financial institution asked the government to examine anti-competitive issues which impinge on the customer-owned sector and introduce a positive disclosure requirement on major banks.
Recent research conducted for the customer-owned sector found over 80% of Australians are unaware the Big Four, which hold nearly 90% of mortgages, own other mainstream home loan lenders too.
As an example, when Westpac advertises for Bank of Melbourne and BankSA it conveys a misleading impression to consumers by making Westpac’s ultimate ownership of both brands obscure, said CUA.
“Consumers should not have to bring forensic skills to the task of finding true alternatives to the Big Four banks. Ultimate ownership should be reasonably apparent in advertising for example, not hidden in the finest of fine print.”
But although CUA has complained to regulators over what it sees is a misleading practice, ACCC said the issue is not relevant to its responsibilities and ASIC said there is no legislative basis for it to force divulgence on the banks and it is difficult to interpret the advertising as misleading or deceptive.
“The only option available to mutuals is to press the government to institute a positive disclosure requirement. This would be a case where more regulation would be a good thing,” CUA said.
Exit fees insufficient for consumers, says mortgage franchise
Competitive home loan pricing led to profit boost, says CEO
Would Australians pay off the mortgage with a pay rise?